Sandhu Roadlines Pvt. Ltd., Pune V. Additional Commissioner of Income-tax,

ITA 1460/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0576 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: S R KARBHARI
• Keywords: Business expenditure
• Section: 143(3); 37

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , ! ' , $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM ITA NO.1460/PN/2014 ASSESSMENT YEAR : 2007-08 SANDHU ROADLINES PVT. LTD., H.O./D-1 (B-WING) 1 ST FLOOR, GHANWAT PLAZA, CHAKAN TALEGAON ROAD, PUNE 410 501. PAN : AALCS1536M . APPELLANT VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 10, PUNE. . RESPONDENT / APPELLANT BY : SHRI S. R. KARBHARI / RESPONDENT BY : SHRI P. L. KUREEL / DATE OF HEARING : 27.09.2016 / DATE OF PRONOUNCEMENT: 27.10.2016 & / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 20.06.2014 FO R THE ASSESSMENT YEAR 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER :- 2.1 ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN T HE BUSINESS OF TRANSPORT. THE ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INC OME FOR ASSESSMENT YEAR 2007-08 DECLARING TOTAL TAXABLE INCOME OF RS.71,97,520/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE INCOME 2 ITA NO.1460/PN/2014 TAX ACT, 1961 (IN SHORT THE ACT) VIDE ORDER DATED 10.11.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,72,16,520/-. AGGRIEVED BY T HE ORDER OF LD. ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A), WHO VIDE ORDER DATED 20.06.2014 (IN APPEAL NO.PN/CIT(A)-V/ADDL.CIT, RG-1 0/49/09-10) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN DS :- 1. DISALLOWANCE OF BUSINESS EXPENDITURE: THE LEARNED CIT (A) - V, PUNE, ERRED ON FACTS AND I N LAW IN THE DISALLOWANCE OF PENALTY/FINE PAID TO RTO TO CLEAR OVER DIMENTIONAL CONSIGNMENT OF RS.41,21,867/- AS NOT BUSINESS EXPENDITURE AND WITHOUT APPRECIATIN G THAT PAYMENT IS BUSINESS EXPENDITURE, UNDER SECTION 37 OF THE INCOME TAX ACT , 1961 RELIEF CLAIMED: THE ASSESSING OFFICER BE DIRECTED TO TREAT THE AMOU NT PAID TO RTO AS PENALTY/FINE OF RS.41,21,867/- AND ALLOW AS BUSINESS EXPENDITURE . 2. NON ACCEPTANCE OF HON. TRIBUNAL DECISION AS NON BINDING NATURE: WITHOUT PREJUDICE TO THE GROUND 1, THE LEARNED CIT (A) - V, PUNE, ERRED ON FACTS AND IN LAW IN CONCLUDING THAT RELIANCE BY APPELLANT ON CERTAIN DECISION OF HON. MUMBAI TRIBUNAL, AS NON BINDING NATURE, HE IS UNABLE TO FO LLOW. RELIEF CLAIMED: THE ASSESSING OFFICER BE DIRECTED TO DELETE THE DIS ALLOWANCE OF RS.41,21,867/-, UNDER THE HEAD OWN TRUCK TRIP EXPENSES, ON ACCOUNT OF COMPOUNDING FEE PAID TO RTO BY WAY OF PENALTY/FINE, AS ON SIMILAR FACTS, LA W IS WELL SETTLED, BY HON. MUMBAI TRIBUNAL. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, A MEND OR DELETE ANY OF THE GROUNDS OF APPEAL OR ADD TO THE SAME, IF DEEMED NEC ESSARY. 3. THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS, BUT ALL THE GROUNDS BEING INTERCONNECTED CONSIDERED TOGETHER. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E LD. ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLAIMED RS.3,69,18,627/- UNDER THE HEAD OF OWN TRUCK TRIP EXPENSES. THE LD. ASSESSING OFFICER NOTED TH AT SUMMONS WERE ISSUED UNDER SECTION 131(1) OF THE ACT TO THE MANAGING DIRECTOR, SHRI B. S. SANDHU AND HIS STATEMENT WAS RECORDED ON OATH. IN THE STATEMENT, IT WAS SUBMITTED BY THE DIRECTOR 3 ITA NO.1460/PN/2014 THAT THE EXPENSES WERE DEBITED ON THE BASIS OF STAT EMENTS SUBMITTED BY THE DRIVERS AFTER COMPLETION OF THE TRIP AND SOME PORTION OF TH E EXPENSES RELATED TO THE BRIBE PAID TO POLICE AND RTO OFFICIALS. THE LD. ASSESSIN G OFFICER NOTED THAT THE VOUCHERS WERE SELF-MADE VOUCHERS AND THE STATEMENT OF THE TR UCK DRIVERS FOR INCURRING OF THE EXPENSES COULD NOT BE VERIFIED AS ASSESSEE HAS STAT ED THAT 50% OF THE DRIVERS HAD LEFT THEIR JOBS. THE LD. ASSESSING OFFICER ACCORDI NGLY DISALLOWED 20% OF EXPENSES AMOUNTING TO RS.73,83,725/-. BEFORE LD. CIT(A) ON BEHALF OF THE ASSESSEE IT WAS INTER-ALIA SUBMITTED THAT THE DISALLOWANCE WERE MADE ON AD-HOC BASIS WITHOUT ANY FINDING OF DEFECT IN THE BOOKS OF ACCOUNT AND MEREL Y ON THE BASIS OF STATEMENT OF MANAGING DIRECTOR. THE LD. CIT(A) THEREFORE VERIFI ED THE BOOKS OF ACCOUNT AND VOUCHERS FOR THE MONTH OF MARCH, 2007 AND NOTED THA T ASSESSEE HAD PAID RTO PENALTY OF RS.40,000/- ON EACH TRUCK IN RESPECT OF TRANSPORTATION OF GOODS OF M/S SUZLON ENERGY LTD. FROM DAMAN TO DHULE ON ACCOUNT O F EXCESS LENGTH, EXCESS WIDTH AND EXCESS REAR PROJECTION. THE AGGREGATE OF SUCH EXPENSES DEBITED BY ASSESSEE WAS RS.41,21,867/-. HE WAS OF THE VIEW TH AT EXPENSES PAID TO RTO WERE IN THE NATURE OF PENALTY AND HE ACCORDINGLY DISALLO WED RS.41,21,867/- AND THUS GRANTED RELIEF TO THE EXTENT OF RS.16,22,020/-. AG GRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 4. BEFORE US, THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND FURTHER PLACED ON RECORD THE COPY OF PHOTOGRAPH OF THE GOODS THAT WAS TRANSPORTED AND FOR WHICH THE ASSESSEE HAD PAID TO RTO AND THE AMOUNT WAS DISALLOWED. FROM THE PHOTOGRAPHS, HE POINTED OUT TO THE NATURE OF GOODS AND SUBMITTED THAT THE NATURE OF GOODS THAT WAS TRANSPORTED WAS SUCH THAT IT WAS NOT POSSIBLE TO TRANSPORT THE GOODS IN THE NORMAL TRUCK AND THAT THE OVER DIM ENTIONAL CONSIGNMENT WAS A SINGLE INDIVISIBLE PIECE AND COULD NOT BE DIVIDED I NTO PARTS AND PIECES AND THE ASSESSEE HAD NO OTHER OPTION TO TRANSPORT THEN EVEN THOUGH IT EXCEEDED THE PERMISSIBLE LIMITS. IT WAS FURTHER SUBMITTED THAT PAYMENT WAS NOT FOR ANY 4 ITA NO.1460/PN/2014 CONTRAVENTION OF ANY LAW BUT WAS IN THE NATURE OF C OMPOUNDING FEES FOR TRANSPORTATION OF OVER DIMENTIONAL CONSIGNMENT AND HAS TO BE CONSIDERED AS ESSENTIAL BUSINESS EXPENDITURE. HE FURTHER SUBMITT ED THAT ON IDENTICAL FACTS IN THE CASE OF DCIT VS. SHRI BHARAT C. GANDHI, MUMBAI BENC H OF THE TRIBUNAL HAD ALLOWED THE EXPENSES. HE PLACED ON RECORD THE COPY OF THE DECISION IN ITA NO.4270/MUM/2009 ORDER DATED 30 TH MARCH, 2011 AT PAGE 37 39 OF THE PAPER BOOK AND POINTED TO THE RELEVANT THE FACTS IN THE C ASE OF SHRI BHARAT C. GANDHI (SUPRA). HE THEREFORE SUBMITTED THAT SINCE ON IDEN TICAL FACTS, THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS ALLOWED THE EXPENSES, THE SAME BE ALLOWED IN THE CASE OF ASSESSEE ALSO. THE LD. DR, ON THE OTHER HAND, SUPP ORTED THE ORDER OF LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS THE AMOUNT PAID TO RTO FOR TRANSPORTATION OF OVER DIMENTIONAL CONSIGNMENT. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAD PAID TO RTO THE AMOUNT FOR TRANSPORTING OF OVERSIZED GOODS OF S UZLON LTD.. FROM THE PHOTOGRAPHS PLACED BY THE ASSESSEE BEFORE US, IT CA N BE SEEN THAT THE GOODS THAT WERE TRANSPORTED WAS A LARGE SINGLE PIECE OF MACHIN ERY AND PRIMA-FACIE APPEARS TO BE OVER DIMENTIONAL CONSIGNMENT. WE FIND THAT IDEN TICAL ISSUE OF PAYMENT OF COMPOUNDING FEES TO RTO FOR TRANSPORTATION OF OVER DIMENTIONAL CONSIGNMENT OF M/S SUZLON ENERGY LTD. WAS BEFORE THE CO-ORDINATE B ENCH OF MUMBAI TRIBUNAL. THE MUMBAI TRIBUNAL AFTER CONSIDERING THE VARIOUS D ECISIONS CITED THEREIN HAS NOTED THAT FEES PAID WAS NOT IN VIOLATION OF LAW BU T WAS IN THE NATURE OF COMPOUNDING FEES FOR TRANSPORTING OVER DIMENTIONAL CONSIGNMENT AND IT CANNOT BE CONSIDERED TO IN VIOLATION OF LAW. THE RELEVANT OB SERVATION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IS REPRODUCED HEREIN FOR READ Y REFERENCE :- 3. ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S . DARSHAN ROADLINES WHICH SPECIALISES IN TRANSPORTING CARGO OF OVER -DIMENSIO NAL CONSIGNMENTS WHERE THE FRONT SIDE AND REAR DIMENSION OF THE CONSIGNMENT AS WELL AS THE WEIGHT OF THE 5 ITA NO.1460/PN/2014 CONSIGNMENT EXCEED THE SAME ALLOWED UNDER THE PERMI T GRANTED BY THE RTO AND THE LIMITS LAID DOWN UNDER THE MOTOR VEHICLE ACT, 1 988 AND THE RULES MADE THERE UNDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE PAID COMPOUNDING FEES AGGREGATING TO RS.73 ,45,953/- TO THE RTO AT THE CHECK POST AT BHACHAU, GUJARAT ON VARIOUS TRIPS DUR ING THE YEAR FOR TRANSPORTATION OF OVER DIMENSIONAL CONSIGNMENTS IN ITS TRAILERS OF M/S. SUZLON ENERGY LTD. THE A.O. ASKED WHY THE SAME SHOULD NOT BE DISALLOWED AS IT I S IN THE NATURE OF SHRI BHARAT C. GANDHI PENALTY AND NOT ALLOWABLE UNDER SECTION 37(1 ). IT WAS ASSESSEE'S CONTENTION THAT THE OVER DIMENSIONAL CONSIGNMENT WAS INDIVISIB LE AND CANNOT BE DIVIDED INTO PARTS AND PIECES AND THEREFORE THERE IS NO OTHER PO SSIBILITY EXCEPT TO TRANSPORT THEM BY EXCEEDING THE PERMITTED LIMITS. HE SUBMITTED THA T TRANSPORTATION OF THIS IS A BUSINESS NECESSITY AND COMMERCIAL EXIGENCY AND NOT INVOLVED ANY DELIBERATE INTENTION OF VIOLATING ANY LAW OR RULES. IT WAS FUR THER SUBMITTED THAT EVENTHOUGH IT IS A COMPOUNDING FEES PAID UNDER SECTION 86(5) OF THE MO TOR VEHICLE ACT TO THE RTO, IT IS AN OPTION GIVEN TO THE ASSESSEE AND THIS CANNOT BE REFERRED AS PENALTY. IT WAS FURTHER SUBMITTED THAT SUCH OVER DIMENSIONAL CHARGE S WERE ALSO PAID TO WESTERN RAILWAYS FOR CROSSING THE RAILWAY TRACKS AND AN AMO UNT OF RS.2,71,380/- WAS ALLOWED BY THE A.O. THE A.O. DID NOT AGREE WITH ASS ESSEE'S CONTENTIONS AND DISALLOWED THE SAME. THE CIT(A), HOWEVER, NOTICED T HAT THE EXPENDITURE IS NOT IN VIOLATION OF THE MOTOR VEHICLE ACT AND CANNOT BE TE RMED AS PENALTY AND RELYING ON THE CLARIFICATIONS GIVEN BY THE CENTRAL GOVERNMENT VIDE LETTER DATED 03.08.2008 AND AFTER RELYING ON THE DECISION OF THE ITAT 'C' BENCH IN ITS ORDER DATED 29.01.2001 ALLOWED THE EXPENDITURE AS AN ALLOWABLE DEDUCTION U NDER SECTION 37(1). THE REVENUE IS AGGRIEVED. 4. THE LEARNED COUNSEL AT THE OUTSET SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT IN THE CASE OF M/S. CHADHA & CHADHA CO. IN ITA NO. 3524/MUM/2007 AND THE FACTS A RE SIMILAR. HE FURTHER SUBMITTED THAT THE CENTRAL GOVERNMENT ITSELF HAS CL ARIFIED VIDE CIRCULAR DATED 3RD SEPTEMBER 2008 THAT SUCH CONSIGNMENTS MEANT FOR INF RASTRUCTURAL PURPOSE SHOULD BE EXEMPT FROM LEVY OF COMPOUNDING FEES BY RTO AND RELIED ON THE HON'BLE GUJARAT HIGH COURT DECISION IN THE CASE OF NABROS T RANSPORT P LTD TO SUBMIT THAT THIS LEVY WAS HELD ARBITRARY AND ILLEGAL WHEN IT WAS COL LECTED ONLY AT CHECK POSTS IN GUJARAT. HE FURTHER REFERRED TO SECTION 86(5) OF TH E MOTOR VEHICLE ACT AND RELIED ON THE PRECEDENCE ON THE ISSUE IN THE FOLLOWING CASES: - I) CIT VS. AHMEDABAD COTTON MFG CO. LTD. 205 ITR 16 3 (SC) II) CIT VS. H.M. PARTHASARATHY 212 ITR 105 (MAD) III) ACIT VS. VIKAS CHEMICALS 122 TAXMAN 59 (DEL) S HRI BHARAT C. GANDHI IV) CIT VS. HERO CYCLES LTD. 178 TAXMAN 484 (P&H) V) KAIRA CAN COMPANY LTD. VS. DCIT 31 DTR (MUM) (TR IB) 485 VI) WESTERN COALFIELDS LTD. VS. ACIT 27 DTR (NAG) ( TRIB) 226 5. HE PLACED A PAPER BOOK ON RECORD ABOUT THE ACTIV ITIES OF THE ASSESSEE AND PHOTOES INVOLVING CARRYING OF OVER DIMENSIONAL CONS IGNMENTS UNDERTAKEN BY THE ASSESSEE ROADLINES. 6. THE LEARNED D.R., HOWEVER, SUBMITTED THAT THE IS SUE IS NOT OF NOMENCLATURE BUT THE INTENTION OF THE LEGISLATURE IN NOT ALLOWIN G THE AMOUNTS PAID FOR VIOLATION OF LAW. THE LEARNED D.R., HOWEVER, SUBMITTED THAT THE ASSESSEE WAS GIVEN PERMISSION TO TRANSPORT REQUIRED WEIGHT WITH PERMITTED AXILS A S CAN BE SEEN FROM THE CIRCULAR BY THE CENTRAL GOVERNMENT AND NOWHERE IT IS STATED THA T ASSESSEE SATISFIED THE CONDITIONS. THEREFORE, IT IS SUBMITTED THAT THIS IS A PENALTY FOR VIOLATING THE LAW AND, THEREFORE, CANNOT BE ALLOWED. 7. THE LEARNED COUNSEL IN REPLY SUBMITTED THAT THE ISSUE BEFORE THE A.O. IS NOT THAT OF THE TRAILER CAPACITY BUT THE COMPOUNDING FE ES PAID AND IT WAS SUBMITTED THAT 6 ITA NO.1460/PN/2014 ASSESSEE MADE ABOUT 230 TRIPS DURING THE YEAR FROM THE SAME CHECK POST AND KNOWING VERY WELL THAT ASSESSEE IS CARRYING ALWAYS OVER DIMENSIONAL CONSIGNMENTS THE RTO WAS INVARIABLY LEVYING FEES WHILE ALLOWING THE TRUCKS TO BE TRANSPORTED ON ROAD AND IT IS NOT IN VIOLATION OR CONTRAVENTION OF ANY LAW BUT SIMPLE COMPOUNDING FEES PAID FOR TRANSPORTING OVER DIMENSIONAL CONSIGN MENTS WHICH IS ASSESSEE'S BUSINESS ITSELF. 8. WE HAVE CONSIDERED THE ISSUE. AS RIGHTLY CONSIDE RED BY THE CIT(A) FEES PAID IS NOT IN VIOLATION OF LAW BUT AN OPTION GIVEN TO T HE ASSESSEE TO PAY COMPOUNDING FEES FOR TRANSPORTING OVER DIMENSIONAL CONSIGNMENTS GENERALLY TERMED AS OVER LOADING CHARGES. THIS ISSUE WAS ELABORATELY DISCUSS ED BY THE ITAT IN THE CASE OF M/S. CHADHA & CHADHA CO. IN ITA NO. 6140/MUM/2009 D ATED 17.09.2010 RELIED UPON BY THE ASSESSEE WHEREIN THE ITAT IN ITS ORDER HAS CONSIDERED AS UNDER: - '9. THE LIABILITY FOR ADDITIONAL FREIGHT CHARGES WA S CONSIDERED IN THE CASE OF ITO VS. RAMESH STONE WARES BY THE ITAT AMRITSAR BENCH IN 62 TTJ (ASR) 93 WHEREIN THE ADDITIONAL FREIGHT CHARGES PAID TO R AILWAY DEPARTMENT FOR OVERLOADING WAS CONSIDERED AND HELD THAT SHRI BHARA T C. GANDHI THE EXPENSE WAS NOT PENAL IN NATURE BECAUSE IT IS NOT T HE INFRINGEMENT OF LAW BUT SAME IS VIOLATION OF CONTRACT THAT TOO NOT BY T HE ASSESSEE BUT BY HIS AGENT, I.E. COAL AUTHORITY OF INDIA. IN TERMS OF AN AGREEMENT, IF COAL IS FINALLY FOUND BY THE AUTHORITIES TO BE OVERLOADED THEN THE ASSESSEE HAS TO PAY ADDITIONAL FREIGHT CHARGES WHICH ACCORDING TO THE T ERMINOLOGY OF THE CONTRACT IS CALLED PENALTY FREIGHT. THIS LIABILITY WAS NOT C ONSIDERED AS PENAL NATURE AND ALLOWED. IN ASSESSEE'S CASE ALSO THE OVERLOADIN G CHARGES ARE TO BE INCURRED REGULARLY IN VIEW OF THE NATURE OF GOODS T RANSPORTED FOR THE SAID STEEL COMPANY AND SINCE THE NATURE OF THE GOODS IS INDIVISIBLE AND GENERALLY MORE THAN THE MINIMUM LIMIT PRESCRIBED UNDER THE MO TOR VEHICLE ACT, THE ASSESSEE HAS TO NECESSARILY PAY COMPOUNDING CHARGES FOR TRANSPORTING GOODS AS PART OF THE BUSINESS EXPENSES. THESE ARE N OT IN CONTRAVENTION OF LAW AND THE RTO AUTHORITIES NEITHER SEIZED THE VEHI CLE NOR BOOKED ANY OFFENCE BUT ARE GENERALLY COLLECTING AS A ROUTINE A MOUNT AT THE CHECK POST ITSELF WHILE ALLOWING THE GOODS TO BE TRANSPORTED. IN VIEW OF THE NATURE OF COLLECTION AND PAYMENT WHICH ARE NECESSARY FOR TRAN SPORTING THE GOODS IN THE BUSINESS OF THE ASSESSEE, WE ARE OF THE OPINION THAT IT DOES NOT CONTRAVENE THE M V ACT AS STATED BY THE A.O. AND TH E CIT(A). 10. SIMILAR ISSUE ALSO AROSE WITH REFERENCE TO FINE AND PENALTY PAID ON ACCOUNT OF VIOLATION OF NATIONAL STOCK EXCHANGE REG ULATIONS IN THE CASE OF MASTER CAPITAL SERVICES LTD. VS. DCIT AND THE HO N'BLE ITAT CHANDIGARH 'A' BENCH IN ITA NO. 346/CHD/2006 DATED 26TH FEBRUA RY 2007 (108 TTJ (CHD) 389 HAS CONSIDERED THAT FINES AND PENALTIES P AID BY THE ASSESSEE TO NSE FOR TRADING BEYOND EXPOSER LIMIT, LATE SUBMISSI ON OF MARGIN CERTIFICATE DUE TO SOFTWARE PROBLEM AND DELAY IN MAKING DELIVER IES OF SHARES DUE TO DEFICIENCIES ARE PAYMENTS MADE IN REGULAR COURSE OF BUSINESS AND NOT INFRACTION OF LAW, HENCE ALLOWABLE. IN THE ASSESSEE 'S CASE ALSO THESE FINES ARE PAID REGULARLY IN THE COURSE OF ASSESSEE'S BUSI NESS FOR TRANSPORTATION OF GOODS BEYOND THE PERMISSIBLE LIMIT AND THESE PAYMEN TS ARE BEING MADE IN THE REGULAR COURSE OF BUSINESS TO THE SAME RTO AUTH ORITIES AT THE CHECK POST EVERY YEAR, IN EARLIER YEARS AND IN LATER YEAR S ALSO. ACCORDINGLY IT HAS TO BE HELD THAT THESE PAYMENTS ARE NOT FOR ANY INFRACT ION OF LAW BUT PAID IN THE COURSE OF ASSESSEE'S BUSINESS OF TRANSPORTATION AND THESE ARE ALLOWABLE EXPENSES UNDER SECTION 37(1).' 9. IN VIEW OF THE LEGAL PRINCIPLES ESTABLISHED ABOV E AND ALSO NOTICING THAT THE ASSESSEE HAS MADE ABOUT 230 TRIPS BY PAYING COMPOUN DING FEES, AS PER THE RULES IN THE MOTOR VEHICLE ACT, IT CANNOT BE STATED THAT ASSESSEE'S PAYMENTS OF COMPOUNDING FEES IS IN VIOLATION OF LAW. SINCE ASSE SSEE IS ENGAGED IN TRANSPORTING OF OVER DIMENSIONAL CAPACITIES IN ITS TRANSPORT BUS INESS, IT IS NECESSARY BUSINESS EXPENSE WHOLLY FOR THE PURPOSE OF SHRI BHARAT C. GA NDHI BUSINESS. THEREFORE, THE SAME IS ALLOWABLE UNDER SECTION 37(1). CIT(A)'S ORD ER ON THIS IS CONFIRMED. 7 ITA NO.1460/PN/2014 6. BEFORE US, REVENUE HAS NOT POINTED OUT ANY DISTI NGUISHING FEATURE IN THE FACTS OF PRESENT CASE AND THAT IN THE CASE OF BHARA T C. GANDHI (SUPRA) THAT WAS BEFORE THE CO-ORDINATE BENCH OF MUMBAI, ITAT. FURT HER, THE REVENUE HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT T HE AFORESAID DECISION OF MUMBAI TRIBUNAL HAS BEEN SET-ASIDE BY THE HONBLE HIGH COU RT. IN VIEW OF THE AFORESAID FACTS AND FOLLOWING THE SIMILAR REASONING, WE ARE O F THE VIEW THAT THE AMOUNT PAID BY THE ASSESSEE TO RTO FOR THE TRANSPORTATION OF OV ERSIZED GOODS CANNOT BE CONSIDERED TO BE IN VIOLATION OF LAW BUT HAS TO BE CONSIDERED AS A NECESSARY BUSINESS EXPENDITURE IN THE LINE OF BUSINESS IN WHI CH THE ASSESSEE IS ENGAGED AND THEREFORE IN SUCH A SITUATION, THE EXPENDITURE CANN OT BE DISALLOWED. IN VIEW OF THE AFORESAID FACTS, WE DIRECT THE DELETION OF ADDITION UPHELD BY THE LD. CIT(A). THUS, THIS GROUND OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF OCTOBER, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 27 TH OCTOBER, 2016. & ' (!)* +*! / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. & / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE