9911796707
TMI Blog2019 (12) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 2012-13, Revenue preferred this appeal. 2. Brief facts of the case are that the assessee is a company engaged in the business of trading of imported coal. For the assessment year 2012-13, they have filed their return of income on 19/09/2012 declaring a loss of Rs. 12,44,66,628/-. Assessment was, however, was complete at a loss of Rs. 8,72,01,852/- after making many additions including the addition by way of disallowance under section 37(1) of the Income Tax Act, 1961 (for short "the Act") to the tune of Rs. 3,66,68,504/-, which amount represented the penalty amount for supply of the coal with high moisture and low gross calorific value. 3. Assessee explained before the assessing officer that they sold coal to different parties as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged the said addition before the Ld. CIT(A). Ld. CIT(A), reappraised the entire material before him in the light of the provisions under section 37 (1) of the Act and also in the light of the decisions of the Hon'ble Apex Court in the case of Prakash Cotton Mills (P) Ltd 111 CTR SC 389, Swadeshi Cotton Mills Company Limited vs. CIT, Continental constructions Ltd vs. CIT (1992) 101 CTR (SC) 386 and also the decisions of the Kerala and the Andhra Pradesh High Courts in CIT vs. Catholic Syrian bank Ltd (2004) 265 ITR 177 (Ker) and CIT vs. or television private limited (1996) 218 ITR 173 (AP). On considering the provisions under section 37 (1) of the Act and the decisions referred to now, Ld. CIT(A) reached a conclusion that the exigibility of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he infraction of law or an offence,because not meeting the parameters set out in the contract will invite same consequences like payment at lesser rates or collection of some amount from the assessee which is exactly the case of the assessee. According to them, Ld. CIT(A) correctly applied the law laid down by the Hon'ble Apex Court and also the Kerala and Andhra Pradesh High Courts and therefore there is no ground to interfere with the impugned order. 8. We have gone through the record in the light of the submissions made on either side. According to the learned Assessing Officer also, the assessee incurred the expenditure/received the lesser payment from the buyers of the coal because of the supplied coal containing the high moisture and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty was paid for infraction of law so as to attract the provisions under Explanation 1 to section 37 (1) of the Act. It seems the assessing officer did not read the submission of the assessee in a holistic manner, because what all the assessee had submitted is that the penalty was levied on the assessee company for not complying to the terms of the contract. Assessee clearly submitted before the learned Assessing Officer that in spate of their best efforts, sometimes the moisture content of the coal cannot be the same as required by the buyer in view of the open storage of coal, rain factor while storing and transporting, natural environment etc and also because while mixing the different lots having different GCV of coal, to match the spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) that the eligibility of an item to tax or tax deduction can hardly be made to depend on the label given to it by the parties and at the same time the absence of a specific label cannot be destructive of the right of an assessee to claim a deduction, if in fact, the consideration for the receipt can be attributed to the sources indicated in the section. Merely because the assessee categorised the claim under "penalty levied on the assessee company for not complying to the terms of the contract", is not permissible to the jump to the conclusion that such penalty was in respect of any offence or infraction of law committed by the assessee so as to invoke the provisions under Explanation 1 to section 37 (1) of the Act. The expression "penal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
