DCIT, CC-1(3), KOLKATA, Kolkata V. M/s Rungta Mines Ltd., Kolkata

ITA 1653/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1964 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 17-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K TIWARI
• Keywords: Capital expenditure
• Section: 43B; 143(3); 37(1); 37; 139

Judgement Text

1 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH D KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM ] ITA NO.1653/KOL/2016 ASSESSMENT YEAR : 2013-14 D.C.I.T., CENTRAL CIRCLE-1(3) -VERSUS- M/S RUNGTA MINES LTD. KOLKATA KOLKATA (PAN:AABCR 6463 N) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI A.K.TIWARI, CIT FOR THE RESPONDENT: SHRI SUBASH AGARWAL, ADVOCATE DATE OF HEARING : 03.01.2018. DATE OF PRONOUNCEMENT : 10.01.2018. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 23.05.2016 OF C.I.T- (A)-20, KOLKATA RELATING TO A.Y.2013-14. 2. GROUND NO.1 RAISED BY THE REVENUE READS AS FOLLO WS :- (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, L D.CIT(A) IS ERRED IN DELETING THE DISALLOWANCES AS THE OVERLOADING CHARGES IS NOT HING BUT A PENALTY AS PER PROVISION OF SECTION 73 OF THE INDIAN RAILWAY ACT, 1989. 3. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN TH E BUSINESS OF MINING. IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (ACT) THE AO NOTICED THAT UNDER THE HEAD FREIGHT AND TRANSP ORTING EXPENSES THERE WERE CERTAIN EXPENSES INCURRED BY THE ASSESEE. THE AFORE SAID EXPENSES ALSO INCLUDED EXPENDITURE OF RS.5,77,69,535/- WHICH WAS PAID BY T HE ASSESSEE AS RAILWAY PUNITIVE CHARGES. ACCORDING TO THE AO THESE CHARGES WERE IN THE NATURE OF EXPENSES INCURRED FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PRO HIBITED BY LAW AND THEREFORE OUGHT NOT TO BE ALLOWED AS A DEDUCTION WHILE COMPUTING TH E INCOME FROM BUSINESS AS PER THE PROVISION OF EXPLANATION TO SECTION 37(1) OF THE AC T. SECTION 37 (1) OF THE ACT PROVIDES THAT ANY EXPENDITURE (NOT BEING EXPENDITUR E OF THE NATURE DESCRIBED 2 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENSES OF THE ASSESSEE), LAID OUT OR EXPENDED WHO LLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALL OWED AS A DEDUCTION IN COMPUTING INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. EXPLANATION TO SEC.37(1) LAYS DOWN AS FOLLOWS: FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHI CH 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. 4. THE STAND OF THE ASSESSEE WAS THAT THESE PAYMENT S WERE NOT IN THE NATURE OF PENALTY FOR INFRINGEMENT OF LAW AND WERE PURELY IN THE NATURE OF COMPENSATORY CHARGES AND THEREFORE CANNOT BE DISALLOWED UNDER EX PLANATION TO SECTION 37(1) OF THE ACT. THE ASSESSEE EXPLAINED THE NATURE OF RAILWAY P UNITIVE CHARGES THAT THE CHARGES THOUGH CALLED PUNITIVE CHARGES IN THE TERMINOLOGY O F THE RAILWAYS DID NOT ACTUALLY RELATE TO ANY OFFENCE OR INFRINGEMENT OF LAW. ON TH E CONTRARY, IT WAS IN THE NATURE OF ADDITIONAL FREIGHT ON OVERLOAD OF GOODS BEYOND THE PERMISSIBLE LIMIT. THE ASSESSEE SUBMITTED THAT THE GOODS ARE LOADED FOR DESPATCH TO CUSTOMERS THROUGH RAILWAY WAGONS. WHEN THE ASSESSEE LOADS THE GOODS FOR DESP ATCH THROUGH RAILWAY WAGONS ACTUAL MEASUREMENT OF WEIGHT CANNOT BE DONE DUE TO ABSENCE OF WEIGHING BRIDGE AT THE ORIGINATING STATION. THE LOADING NEVERTHELESS IS DONE ON SOME ESTIMATE BASIS WHICH OFTEN VARIES FROM THE RAILWAY MEASUREMENT WHE N IT ACTUALLY GOES TO THE WEIGHING BRIDGE. IN CASE IT IS FOUND THAT THE GOODS WERE LOADED IN EXCESS THAN THE PERMISSIBLE LOAD, IT CANNOT BE UNLOADED. THE RAILWA YS HOWEVER RECOVER PUNITIVE CHARGES FOR SUCH OVERLOADING AS ADDITIONAL FREIGHT WHICH IS ONLY COMPENSATORY IN NATURE. THE ASSESSEE REITERATED THAT OVERLOADING CH ARGES WERE NOT IN THE NATURE OF PUNISHMENT FOR VIOLATION OR INFRACTION OF LAW BUT B Y WAY OF COMPENSATION FOR PERMITTING TO OVERLOAD THE GOODS BEYOND THE PERMISS IBLE LIMIT; MOREOVER, THERE IS NO PROVISION FOR CRIMINAL ACTION OR PROSECUTION OR CON FISCATION OF GOODS FOR OVERLOADING. 3 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 IT WAS ARGUED THAT IN FACT OVERLOADING WAS VERY COM MON WHICH WAS PERMITTED BY THE RAILWAYS ON ADDITIONAL FREIGHT TERMED AS PUNITIVE C HARGES. 5. THE ASSESSEE ALSO SUBMITTED THAT OVERLOADING OF WAGONS WAS NOT A DELIBERATE ACT ON THE PART OF THE ASSESSEE BUT WAS BASICALLY D UE TO THE LACK OF INFRASTRUCTURAL FACILITY AT THE LOADING STATION. IN CASE WEIGHING B RIDGE EXISTED AT THE LOADING STATION, THEN OVERLOADING OF WAGONS COULD BE EASILY AVOIDED. THE ASSESSEE ALSO RELIED ON NOTIFICATION DATED THE 23RD DECEMBER 2005 (TO BE PU BLISHED IN GAZETTE OF INDIA, PART- II, SECTION 3(I) OF THE GAZETTE OF INDIA) ISSUED BY THE MINISTRY OF RAILWAYS WHEREIN PUNITIVE CHARGES FOR OVERLOADING HAS BEEN DEFINED I N PARA 3 AS : 'WHERE THE COMMODITIES ARE OVERLOADED IN A 8-WHEELE D WAGON, THE RAILWAY ADMINISTRATION SHALL RECOVER PUNITIVE CHARGES AS PR OVIDED IN PARTS I, II AND III OF THE SITUATION 'A' & 'B' OF THE SCHEDULE, FROM TH E CONSIGNOR, THE CONSIGNEE OR THE ENDORSEE AS THE CASE MAY BE, FOR THE ENTIRE WEI GHT OF THE COMMODITIES LOADED BEYOND THE PERMISSIBLE CARRYING CAPACITY FOR THE ENTIRE DISTANCE TO BE TRAVELLED BY THE TRAIN HAULING THE WAGON FROM THE O RIGINATING STATION TO THE DESTINATION POINT, IRRESPECTIVE OF THE POINT OF DET ECTION OF OVERLOADING : PROVIDED THAT NO PUNITIVE CHARGES WILL BE LEVIED IF THE CUSTOMER CARRIES OUT LOAD ADJUSTMENT AT THE ORIGINATING STATION ITSELF IN CAS E OF DETECTION OF OVERLOADING AT ORIGINATING POINT. 6. THE ASSESSEE THUS ARGUED THAT THE VERY HEADING O F PARA 3 OF THE SAID NOTIFICATION 'ISSUED BY THE MINISTRY OF RAILWAYS NA MELY 'PUNITIVE CHARGES FOR OVERLOADING' MAKES IT AMPLY CLEAR THAT SUCH CHARGES WERE ACTUAL LY IN THE NATURE OF ADDITIONAL FREIGHT FOR OVERLOADING BEYOND THE PERMI SSIBLE CARRYING CAPACITY AND WERE NOT IN THE NATURE OF PENALTY FOR ANY OFFENCE OR INF RINGEMENT OF LAW. THE CHARGES WERE IN FACT COMPENSATORY IN NATURE FOR TRANSPORTATION O F GOODS LOADED BEYOND THE PERMISSIBLE CARRYING CAPACITY AND IT WAS ONLY IN TH E TERMINOLOGY OF THE RAILWAYS THAT SUCH CHARGES ARE CALLED PUNITIVE CHARGES BUT IN COM MERCIAL PARLANCE IT IS NOT IN THE NATURE OF PENALTY FOR INFRACTION OF LAW. THEREFORE EXPLANATION TO SECTION 37(1) OF THE ACT WILL NOT APPLY TO SUCH CHARGES. 4 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 7. THE AO DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND HE HELD THAT THE EXPENDITURE IN QUESTION CANNOT BE ALLOWED AS DEDUCT ION IN VIEW OF THE PROVISION OF EXPLANATION TO SECTION 37(1) OF THE INCOME TAX ACT, 1961 (ACT). 8. BEFORE CIT(A) THE ASSESSEE PLACED RELIANCE ON TH E FOLLOWING JUDGEMENTS WHEREIN IT WAS HELD THAT RAILWAY PUNITIVE CHARGES W ERE COMPENSATORY PAYMENTS AND CANNOT BE DISALLOWED UNDER EXPLANATION TO SECTION 3 7(1) OF THE ACT. 1. M/S TAURIAN IRON & STEEL CO VS ACIT, ITA NO. 847 & 1613/M/2010 2. WESTERN COALFIELDS LTD VS DCIT, ITA NOS. 289 & 290/ NAG/2006 & 261/NAG/2008 3. AGARWAL ROADLINES (P) LTD VS DCIT, ITA NO. 668/AHD/ 2009 4. DCIT VS BHARAT C GANDHI, ITA NO. 4270/MUM/2009 9. THE CIT(A) FOUND THAT ON AN IDENTICAL ISSUE HE H AD IN ONE OF ASSESSEES GROUP OF CASES FOR A.Y.2008-09 IN AN ORDER DATED 11.12.20 14 TAKEN A VIEW THAT THE PUNITIVE CHARGES FOR OVERLOADING WERE ACTUALLY IN THE NATURE OF ADDITIONAL FREIGHT FOR TRANSPORTING GOODS BEYOND THE PERMISSIBLE CARRYING CAPACITY WHICH CANNOT BE CATEGORISED AS AN EXPENDITURE INCURRED FOR ANY PURP OSE WHICH IS AN OFFICE OR INFRINGEMENT OF LAW. FOLLOWING THE AFORESAID DECIS ION THE CIT(A) TOOK THE VIEW THAT PAYMENT IN QUESTION WAS COMPENSATORY IN NATURE AND NOT PENAL AND THEREFORE THE PROVISION TO EXPLANATION TO SECTION 37(1) OF THE AC T WILL NOT BE APPLICABLE. IN THE DECISION RELIED UPON BY CIT(A) THERE IS ALSO A DISC USSION ABOUT THE NOTIFICATION ISSUED BY THE RAILWAY MINISTRY OF OVERLOADING CHARGES AND ALSO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRAKASH COTTON MILLS P VT. LTD. 201 ITR 684 (SC) AND THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF HERO CYCLES LTD. 178 TAXMANN 484 (P&H). REFERENCE WAS AL SO MADE TO THE DECISION OF ITAT NAGPUR BENCH IN THE CASE OF WESTERN COALFIELDS LTD (2009) 124 TTJ (NAG) 659. IN THE DECISION LAST CITED ON THE SAME NATURE OF EX PENSES NAMELY COMPENSATORY CHARGES TO THE RAILWAYS FOR OVER LOADING OF THE WAG ON, IT WAS HELD TO BE NOT FALLING WITHIN THE AMBIT OF EXPLANATION TO SECTION 37(1) OF THE ACT. 5 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 10. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE H AS RAISED GROUND NO.1 BEFORE THE TRIBUNAL. 11. THE LD. DR PLACED RELIANCE ON THE ORDER OF AO. IT WAS SUBMITTED BY HIM THAT THE ACT OF THE ASSESSEE IN OVERLOADING THE WAGON WA S AN ACT WHICH WAS AGAINST PUBLIC POLICY FOR WHICH PUNITIVE CHARGES ARE LEVIED. HE DR EW OUR ATTENTION TO SECTION 73 OF THE RAILWAY ACT, 1989 WHICH READS AS FOLLOWS :- 73. PUNITIVE CHARGE FOR OVERLOADING A WAGON.-WHER E A PERSON LOADS GOODS IN A WAGON BEYOND ITS PERMISSIBLE CARRYING CAPACITY AS E XHIBITED UNDER SUB-SECTION (2) OR SUB SECTION (3), OR NOTIFIED UNDER SUB-SECTI ON (4), OF SECTION 72, A RAILWAY ADMINISTRATION MAY, IN ADDITION TO THE FREIGHT AND OTHER CHARGES, RECOVER FROM THE CONSIGNOR, THE CONSIGNEE OR THE ENDORSEE, AS THE CA SE MAY BE, CHARGES BY WAY OF PENALTY AT SUCH RATES, AS MAY BE PRESCRIBED, BEFORE THE DELIVERY OF THE GOODS: PROVIDED THAT IT SHALL BE LAWFUL FOR THE RAILWAY AD MINISTRATION TO UNLOAD THE GOODS LOADED BEYOND THE CAPACITY OF THE WAGON, IF DETECTE D AT THE FORWARDING STATION OR AT ANY PLACE BEFORE THE DESTINATION STATION AND TO RECOVER THE COST OF SUCH UNLOADING AND ANY CHARGE FOR THE DETENTION OF ANY WAGON ON THIS ACCOUNT. 12. HE LAID EMPHASIS ON THE FACT THAT THE STATUTORY PROVISION MAKES IT CLEAR THAT THE PUNITIVE CHARGES ARE IN ADDITION TO FREIGHT AND OTH ER CHARGES. HE ALSO HIGHLIGHTED THAT PUNITIVE CHARGES ARE CLEARLY REFERRED TO AS PENALT Y. IT WAS THEREFORE SUBMITTED BY HIM THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE A DDITION MADE BY THE AO. THE LD. DR ALSO BROUGHT TO OUR NOTICE THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF TIME INCORPORATED VS LOKESH SRIVASTAVA (2006) 131 C OMPANY CASE 198 (DELHI). HE DREW OUR ATTENTION TO THE OBSERVATIONS IN THE AFORE SAID DECISION THAT THE PUNITIVE DAMAGES ARE AWARDED FOR THE PURPOSE OF PROVIDING RE LIEF TO THE OVERLOADED JUSTICE DELIVERY SYSTEM BY PROVIDING A CIVIL ALTERATIVE TO CRIMINAL PROSECUTION OF MINOR CRIMES. HIS SUBMISSION WAS THAT THE PUNITIVE DAMAGE S IN THE PRESENT CASE ARE TO BE REGARDED AS PENALTY FOR INFRINGEMENT OF LAW FALLING WITHIN THE AMBIT OF EXPLANATION TO SECTION 37(1) OF THE ACT. THE LD. DR ALSO PLACED RE LIANCE TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MAMTA ENTERPRISES 266 ITR 356 (KA. IN THE AFORESAID CASE, COMPOUNDING CHARGES PA ID FOR UNAUTHORISED CONSTRUCTION WAS CLAIMED AS DEDUCTION WHILE COMPUTING INCOME FRO M BUSINESS. THE HONBLE 6 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 KARNATAKA HIGH COURT HELD THAT THE COMPOUNDING FEE WAS PAID FOR THE PURPOSE OF COMPOUNDING A CRIMINAL OFFENCE AND WAS THEREFORE HI T BY THE PROVISION OF EXPLANATION TO SECTION 37(1) OF THE ACT. REFERENCE WAS ALSO MAD E TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF HAJI AZIZ & ABDUL BROT HERS VS CIT 41 ITR 350 (SC) . IN THE AFORESAID CASE FINE PAID TO CUSTOMS AUTHORIT IES FOR RELEASE OF CONFISCATED GOODS IMPORTED CONTRARY TO LAW WAS HELD TO BE NOT ALLOWAB LE AS DEDUCTION U/S 37(1) OF THE ACT. 13. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANC E ON THE DECISION OF THE ITAT, KOLKATA BENCH IN THE CASE OF DCIT VS M/S. FEEGRADE & COMPANY PVT. LTD. IN IT(SS) A. NOS. 36 TO 38/KOL/2015 DATED 05.04.2017 WHEREIN THIS TRIBUNAL TOOK THE VIEW THAT RAILWAY PUNITIVE CHARGES WERE NOT HIT BY EXPLANATIO N TO SECTION 37(1) OF THE ACT. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THIS TRIBUNAL IN THE CASE OF FEEGRADE & COMPANY PVT. LTD ON AN IDENTICAL ISSUE HAS TAKEN THE FOLLOWING VIEW :- 8. AT THE TIME OF HEARING OF THE APPEAL IT WAS FAIRLY ACCEPTED BY THE PARTIES THAT THE ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT MUMBAI BENCH I N THE CASE OF TAURIAN IRON & STEEL CO.(P)LTD (SUPRA). IN THE AFORESAID DECISION THE HONBLE ITAT AFTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF PRAKASH COTTON MILLS P.LTD. 201 ITR 684 (SC) AND ALSO THE N ATURE OF RAILWAY PUNITIVE CHARGES HELD THAT THE PAYMENTS MADE TO THE RAILWAYS FOR OVERLOADING OF THE WAGONS IS COMPENSATORY IN NATURE AND CANNOT BE DISA LLOWED UNDER EXPLANATION TO SECTION 37(1) OF THE ACT. THE OTHER DECISIONS RE LIED UPON BY THE ASSESSEE SUPPORTS THE PLEA OF THE ASSESSEE AND WHERE THE DEC ISIONS RENDERED IN THE CONTEXT OF OVERLOADING CHARGES PAID TO RAILWAYS. IN VIEW OF THE ABOVE WE DO NOT FIND ANY MERITS IN GROUND NO.1 RAISED BY THE REVENUE. CONSEQ UENTLY THE SAME IS DISMISSED. 15. IN THE CASE OF M/S TAURIAN IRON & STEEL CO (SUP RA) ITAT MUMBAI BENCH DEALT WITH AN IDENTICAL ISSUE AND CAME TO THE FOLLOWING C ONCLUSION :- THE OVERLOADING CHARGES PAID BY THE APPELLANT TO THE RAILWAYS ARE PAID IN THE REGULAR COURSE OF BUSINESS IN ACCORDANCE WITH THE N OTIFICATION ISSUED BY MINISTRY OF RAILWAYS DOTED 23.12.2005. THE NOTIFICATION OF M INISTRY OF RAILWAYS DATED 23.12.2005 PROVIDES A SCHEDULE IN WHICH 'SITUATION A' AND SITUATION B PROVIDES 7 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 THAT F THE AGGREGATED PAYLOAD IN A RAKE EXCEED THE COMBINED PERMISSIBLE CARRYING CAPACITY OF THE RAKE, THE PUNITIVE CHARGES SHOULD BE LEVIED AS PER 'PART - I, 'PART-II, PART-ILL OF SITUATIONS A & B' IT PROVI DES THAT IN CASE OF OVERLOADING UPTO1/2 TONNES, 'PUNITIVE CHARGES ELIGIBLE ON THE E NTIRE WEIGHT OF LOADING BEYOND THE PERMISSIBLE CARRYING CAPACITY SHALL BE NIL (AS PER DIFFERENT TABLES OF SITUATION A' AND SITUATION B' AND IN CASE THE WEIGHT OF COMMO DITY EXCEEDS THE PERMISSIBLE CARRYING CAPACITY . OF THE WAGON BY MORE THAN 1/2 T ONNES, THE PUNITIVE CHARGES ELIGIBLE ON THE ENTIRE WEIGHT LOADING BEYOND THE PE RMISSIBLE CARRYING CAPACITY WOULD BE '2 TIMES THE FREIGHT RATES APPLICABLE TO T HAT COMMODITY IN CASE OF SITUATION A' AND 3 TIMES THE FREIGHT RATES APPLICAB LE TO THE HIGHEST CLASS IN CASE OF SITUATION B'. THUS, IT IS OBVIOUS FROM THE NOTIFICATION OF MINIST RY OF RAILWAYS DATED 23.12.2005 THAT THE RAILWAY AUTHORITIES DO ALLOW OVERLOADING O F ITS RAKE AND IT CHARGES 2 OR 3 TIMES THE FREIGHT RATE APPLICABLE TO THAT COMMODITY AS PUNITIVE CHARGES'. THOUGH THE WORDS USED IN THE NOTIFICATION ARE 'PUNITIVE CH ARGES', THE CHARGES LEVIED BY THE INDIAN RAILWAYS FOR CARRYING THE GOODS IN ITS RAKE .ARE PERMITTED BY RAILWAY AUTHORITIES ITSELF AND THE PUNITIVE CHARGES ARE COM PUTED AS 2 TIMES OR 3 TIMES OF THE FREIGHT RATES. THE PUNITIVE CHARGES LEVIED BY R AILWAYS, IN ACCORDANCE WITH THE NOTIFICATION OF MINISTRY OF RAILWAYS DATED 23.12.20 05, FOR CARRYING GOODS IN ITS RAKES ARE NOT 'FOR ANY PURPOSE WHICH IS AN OFFENSE OR WHICH IS PROHIBITED BY LAW'. AS A MATTER OF FACT, THE INDIAN RAILWAYS ITSELF PER MITS CARRYING WEIGHT LOAD BEYOND THE PERMISSIBLE CARRYING CAPACITY SUBJECT TO PAYMENT OF HIGHER RATE OF FREIGHT BY 2 TIMES OR 3 TIMES. THOUGH THE WORDS ARE 'PUNITIVE CHARGES', THEY ARE PAYMENT WHICH ARE NEITHER AN OFFENSE NOR IS PROHIBI TED BY THE LAW RATHER THE PAYMENT IS IN ACCORDANCE WITH THE LAW AS PROVIDED I N THE NOTIFICATION OF MINISTRY OF RAILWAYS DATED 23.12.2005. IT IS, THEREFORE, HEL D THAT EXPLANATION TO SECTION 37 IS NOT APPLICABLE AND THE PAYMENT OF RS.1,01,85, 78 8/- IS ALLOWABLE. HENCE, THE ADDITION IS DELETED AND GROUND NO. 4 IS ALLOWED. 16. AS FAR AS THE DECISION OF THE HONBLE DELHI HIG H COURT IN THE CASE OF TIME INCORPORATED (SUPRA) CITED BY THE LD. DR BEFORE US IS CONCERNED THAT WAS THE CASE OF A SUIT FOR PERMANENT INJUNCTION AND DAMAGES, FILED AGAINST THE DEFENDANT FOR A PASSING OFF ACTION AND IN THE COURSE OF ITS JUDGEMENT THE HONBLE COURT MADE A REFERENCE REGARDING PURPOSE OF AWARDING PUNITIVE DAMAGES. THE SAID DECISION IS NOT OF ANY APPLICATION WHATSOEVER BE THE PRESENT CASE. THE DEC ISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MAMTA ENTERPRISES(SUPRA) IS AGAIN A CASE WHERE THE CRIMINAL OFFENCE WAS COMPOUNDED AND THE COMPOUNDING FEES WAS CLAIMED AS DEDUCTION. IN THE PRESENT CASE THERE IS NO OFFENCE WHATSOEVER AND THERE IS NO COMPOUNDING FEE PAID AND CLAIMED AS DEDUCTION. AS F AR AS THE DECISION OF THE HONBLE 8 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 SUPREME COURT IN THE CASE OF HAJI AZIZ AND ABDUL BR OTHERS (SUPRA) IS CONCERNED IT WAS AGAIN THE CASE OF BREACH OF PENAL PROVISIONS OF CUSTOMS ACT FOR WHICH FINE WAS PAID. UNDER THESE CIRCUMSTANCES, THE EXPENSES WERE NOT ALLOWED AS DEDUCTION. WE ARE OF THE VIEW THAT IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE THE CLAIM OF THE ASSESSEE FOR DEDUCTION WAS RIGHTLY ALLOWED BY CIT(A ). WE THEREFORE UPHOLD THE ORDER OF CIT(A) AND DISMISS GROUND NO.1 RAISED BY THE REV ENUE. 17. GROUND NO.2 RAISED BY THE REVENUE READS AS FOLL OWS :- (2) IN THE FACTS AND CIRCUMSTANCES AND LAW POINT OF THE CASE, THE ORDER OF THE CIT(A) IS ERRONEOUS BECAUSE IT RELIED ON THE SEC.43 B(B) OF THE ACT WHEREAS THE PRESENT ISSUE IS INVOLVED WITH SEC.36(1)(VA) READ W ITH 2(24)(X) OF THE ACT. 18. THE ASSESSEE AS AN EMPLOYER WITHHELD THE PROVID ENT FUND CONTRIBUTION PAYABLE BY ITS EMPLOYEES FROM THEIR SALARIES PAYABLE, AS TH EIR SHARE OF CONTRIBUTION TO PROVIDENT FUND (PF) AND EMPLOYEES STATE INSURANCE ( ESI). AS PER SECTION 36(1)(VA) OF THE ACT, THE SUM SO WITHHELD AS EMPLOYEES CONTRI BUTION TO PF & ESI, IF IT IS NOT PAID ON OR BEFORE THE DUE DATE AS PROVIDED UNDER TH E RELEVANT LAW GOVERNING THE PROVIDENT FUND, WILL NOT BE ALLOWED AS DEDUCTION. I T IS THE PLEA OF THE ASSESSEE THAT THE EMPLOYEES CONTRIBUTION TO PF & ESI HAD BEEN PAID B Y THE ASSESSEE ON OR BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME FOR THE REL EVANT ASSESSMENT YEAR U/S 139(1) OF THE ACT AND THEREFORE DEDUCTION CLAIMED SHOULD BE A LLOWED AS PROVIDED UNDER THE PROVISO TO SECTION 43B OF THE ACT. THE SAID PLEA OF THE ASSESSEE WAS REJECTED BY THE AO FOR THE REASON THAT THE PROVISO TO SECTION 43B O F THE ACT CANNOT BE READ INTO THE PROVISION OF SECTION 36(1)(VA) OF THE ACT. 19. ON APPEAL BY THE ASSESSEE, THE CIT(A) DIRECT ED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION AND IN DOING SO, THE CIT(A) FOLLOWED THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS AIMI L LTD. & ORS. 229 CTR 418 (DEL) WHEREIN IT WAS HELD THAT EMPLOYEES CONTRIBUT ION TO PF SHOULD BE ALLOWED AS DEDUCTION WHICH IS PAID ON OR BEFORE THE DUE DATE O F FILING THE RETURN OF INCOME U/S 139 OF THE ACT. AGGRIEVED BY THE ORDER OF CIT(A) TH E REVENUE HAS RAISED GROUND NO.2 BEFORE THE TRIBUNAL. 9 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 20. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NOTICE THAT THE HONBLE CALCUTTA HIGH COURT HAS ALSO TAKEN THE VIEW THAT EMPLOYEES CONTRIBUTION TO PF PAID ON OR BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT SHOULD BE ALLOWED AS DEDUCTION. IN THIS REGARD THE DECISION O F THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. AKZO NOBEL INDIA LTD. VS CIT IN ITA 110 OF 2011 ORDER DATED 14.06.2016 AND IN THE CASE OF CIT VS VIJAYSHREE LTD ., OF THE HONBLE CALCUTTA HIGH COURT IN GA NO.2607 OF 2011 ORDER DATED 06.09.2011 WAS FILED BEFORE US. IN THE ORDER IN THE CASE OF VIJAYSHREE LTD., (SUPRA), THE HONBLE CALCUTTA HIGH COURT HELD AS FOLLOWS : THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AS TO WH ETHER THE DELETION OF THE ADDITION BY THE ASSESSING OFFICER ON ACCOUNT OF EMP LOYEESCONTRIBUTION TO ESI AND PF BY INVOKING THE PROVISION OF SECTION 36(1)(V A) READ WITH SECTION 2(24)(X) OF THE ACT WAS CORRECT OR NOT. IT APPEARS THAT THE TRIBUNAL BELOW, IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF COMMIS SIONER OF INCOME TAX VS. ALOM EXTRUSION LTD., REPORTED IN 2009 VOL.390 ITR 3 06, HELD THAT THE DELETION WAS JUSTIFIED. BEING DISSATISFIED, THE REVENUE HAS COME UP WITH THE PRESENT APPEAL. AFTER HEARING MR. SINHA, LEARNED ADVOCATE, APPEARING ON BEHALF OF THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF T HE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ALOM EXTRUSION LT D., WE FIND THAT THE SUPREME COURT IN THE AFORESAID CASE HAS HELD THAT T HE AMENDMENT TO THE SECOND PROVISO TO THE SEC. 43(B) OF THE INCOME TAX ACT, AS INTRODUCED BY FINANCE ACT, 2003, WAS CURATIVE IN NAT.URE AND IS REQUIRED TO BE APPLIED RETROSPECTIVELY WITH EFFECT FROM 1 ST APRIL, 1988. SUCH BEING THE POSITION, THE DELETION OF T HE AMOUNT PAID BY THE EMPLOYEES' CONTRIBUTION BEYOND DUE DATE WAS DEDUCTIBLE BY INVO KING THE AFORESAID AMENDED PROVISIONS OF SECTION 43(B) OF THE ACT. WE, THEREFORE, FIND THAT NO SUBSTANTIAL QU ESTION OF LAW IS INVOLVED IN THIS APPEAL AND CONSEQUENTLY, WE DISMISS THIS APPEAL. 21. IN VIEW OF THE AFORESAID DECISION OF THE HON BLE CALCUTTA HIGH COURT, WE DO NOT FIND ANY MERITS IN THE GROUND RAISED BY THE REVENUE AND ACCORDINGLY THE SAME IS DISMISSED. 10 ITA NO.1653/KOL/2016 M/S. RUNGTA MINES PRIVATE LTD. A.Y.2013-14 22. IN THE RESULT THE APPEAL BY THE REVENUE IS DISM ISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 10.01.2018. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10.01.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M/S RUNGTA MINES PRIVATE LTD., 8A, EXPRESS TOWER, 42A, SHAKESPEARE SARANI, KOLKATA-700012. 2. D.C.I.T., CENTRAL CIRCLE-1(3), KOLKATA. 3. C.I.T.(A)0, KOLKATA 4. C.I.T.-CE NTRAL-1, KOLKATA.. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES