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TMI Blog2018 (12) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that supply of drinking water to employees/labourers at mining site with tanker is a must, to maintain workforce strong for extra loading and unloading of iron ore. Further, AO has not brought on record any contradictory facts which would lead to conclusion that expenditure has not been incurred for any other purposes. As there is no other contrary observations by Ld.AO which is based upon any material evidence, we do not find any reason to uphold addition. We therefore do not find any infirmity in the same and uphold view of CIT (A) in respect of this issue. Addition on account of hiring charges and rack loading charges paid to parties - violation of section 40A(2)(b) - Held that:- As observed from above reproductions that assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound(s) of the appeal raised above at the time of the hearing. 2. Brief facts of the case are as under: Assessee filed its return of income on 26/09/12 declaring 'nil' income which was processed under section 143 (1) of Income Tax Act, 1961 (the Act). Case was selected for scrutiny and notice under section 143(2), 142(1) along with questionnaire was issued. In response to statutory notices, representative of assessee attended proceedings from time to time and filed details as called for. 3. Ld.AO observed that assessee entered into agreement with Orissa Mining Corporation Ltd., for transport of iron ore from OHP (Balliparbat) to Daitari railway siding, including machine loading/unloading and loading of Railway wagons by manual and mechan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed their power of attorney which is placed on record. It is observed that none had appeared on behalf of assessee today. 7. Considering smallness of case, we do not find it necessary to adjourn appeal, and keep it pending. We therefore are inclined to hear present appeal ex parte assessee. 8. Ground No. 1 raised by revenue is in respect of addition of ₹ 1,38,54,151/- being deleted by Ld.CIT (A). 9. Ld.Sr.DR submitted that disallowance of expenses under section 37 (1) of the Act, pertains to punitive charges paid to Railways, for overloading from consignor or consignee as the case may be. He submitted that these expenses are not directly incurred by assessee for purposes of its business. Ld. Sr.DR submitted that punitive cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extra load, which may cause wear and tear to tracks of Railway Department. 11.2. We do not find any infirmity in view of Ld. CIT(A), and uphold the same. 11.3. Accordingly, Ground No. 1 raised by revenue stands dismissed. 12. Ground No. 2 has been raised by revenue against restricting claim amounting to ₹ 1,27,500/- on account of water supply expenses. 13. Ld.Sr.DR submitted that Ld.AO has rightly disallowed 50% of claim, as there was no agreement or evidence with regards to same. 14. We have perused observations of authorities below. 15. It is observed that Ld.CIT(A) restricted disallowance at ₹ 1,27,500/-, by considering the fact that supply of drinking water to employees/labourers at mining site with tanker is a must, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineries from third parties also. The assessee company during the year under appeal, paid ₹ 1,60,79,000/- to Faridabad Gurgaon Minerals (herein after called the 'firm'), a proprietorship concern of Mr. Aman Sethi, who is one of directors in the company and therefore a related party transaction u/s 40A(2)(b) of the Income Tax Act, 1961. Faridabad Gurgaon Minerals was operating mining lease in Distt. Faridabad, Haryana up to March 2009 and has expertise in mining for more than ten years. After expiry of mining lease, the lease period of the firm could not be extended due to ban by Hon'ble Supreme Court on mining activities in Haryana. The total turnover of the firm was more than ₹ 200.00 crores at the time of expiry of mining lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vourable and in accordance with law. COMPARISON CHART OF HIRING CHARGES OF MACHINERY BETWEEN RELATED PARTY/ NON RELATED PARTY S. No. MACHINERY PARTY NAME MONTHLY BILLING AMOUNT OF HIRE CHARGES NO. OF MACHINERY USED RATE OF MACHINERY HIRE CHAREGES RELATED PARTY/NON RELATED PARTY 1 EXCAVATOR FARIDABAD GURGAON MINERALS 453500 1 453500 RELATED PARTY 2. HYVA DUMPERS FARIDABAD GURGARON MINERALS 500000 4 125000 RELATED PARTY 3. HYVA DUMPERS M/S GAGAN BIHAR! MOHANTY 125000 1 125000 NON RELATED PARTY (AS PER QN) 4. HYVA DUMPERS SIVA SAKTI ROAD CARRRIER 135000 1 135000 NOW RELATED PARTY (AS PER QN) 17.2. It is observed from above reproductions that assessee deducted TDS. Merely because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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