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TMI Blog2019 (10) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... h is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure. This Explanation would squarely apply to the facts of the assessee's case and the amount paid being penalty, the AO was justified in disallowing the same and rightly confirmed by the ld. CIT(A). Thus, the ground raised by the assessee stands dismissed. Disallowance of payment made to Sales Tax Department - HELD THAT:- Payment made to Sales Tax Department by way of interest which is compensatory in nature for belated filing of return and payment of taxes thereon. We have also gone through the order of the Joint Commissioner (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the ld. CIT(A) has narrated correct position of law and penalty payment made by the assessee, cannot be claimed as an allowable expenditure. In view of the above facts, the alternative plea raised by the assessee stands dismissed. - I.T.A. No. 186/Chny/2017 (Assessment Year: 2012-13) - - - Dated:- 26-6-2019 - Shri Inturi Rama Rao, Accountant Member And Shri Duvvuru RL Reddy, Judicial Member Appellant by: Shri Philip George, Advocate Respondent by: Mrs. R. Anita, JCIT ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), Puducherry, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty of ₹ 11,04,495/- paid to Uttaranchal Power Corporation should not be disallowed, the assessee has submitted that both the payments are amounts charged by Uttaranchal Power Corporation at enhanced tariff rate for having consumed more energy during restricted hours of supply. On verification of the copies of bills letters of Uttaranchal Power Corporation, the Assessing Officer noticed that there was clear cut violation of order issued by UERC, which has clearly stated that any violation detected shall attract a penalty , by violation of norms laid down by UERC, the assessee paid penalty. Since the claim of penalty is not allowable under section 37(1) of the Act, the penalty paid by the assessee of ₹ 11,04,495/- [ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectricity charges as claimed by the assessee. 5.1 As per UERC norms, there are two different types of power supply i.e., continuous supply and non-continuous supply. The consumers who have opted for continuous supply shall be exempted from load shedding during scheduled/unscheduled power cuts and during restricted hours of the period of restriction in usage approved by the Commission from time to time, except load shedding required due to emergency breakdown/shutdown. For such consumers 10% increase in the energy charge as given in rate of charge shall be applicable for the remaining part of the year. Demand charge and other charges remain same as per rate of charge prescribed by the UERC. Similarly, the consumers not opting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A). Thus, the ground raised by the assessee stands dismissed. 6. The next ground raised in the appeal of the assessee relates to disallowance of penalty payment made to Sales Tax Department of ₹ 9,89,171/-. The Assessing Officer disallowed the penalty payment made to the Sales Tax Department, since in view of the Explanation to section 37(1) of the Act, the assessee is not entitled to claim deduction of the said amount. On appeal, the ld. CIT(A) confirmed the disallowance. 6.1 We have heard both the contentions. We have considered the submissions of the ld. Counsel that the payment made to Sales Tax Department by way of interest which is compensatory in nature for belated filing of return and paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Against the submissions of the assessee, the ld. CIT(A) has observed that as per Explanation to section 37(1) of the Act itself, it is given that such expenditure which is an offence or prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure and made it clear that only that expenditure which is related to business activity would come under the purview of the aforesaid circular of the CBDT. The ld. CIT(A) further held that the expenditure had already been incurred and therefore, but for the disallowance under the Income Tax Act, would not increase the profit in the hands of the assessee. Thus, the ld. CIT(A) has held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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