DCIT, CC-1(3), KOLKATA, Kolkata V. M/s. Bonai Industrial Company Limited, Kolkata

ITA 1655/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1680 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 17-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VARKEY JUDIC IA L M EMBER
• Assessee Lawyers: ARINDAM BHATTACHERJEE RE
• Keywords: Business expenditure
• Section: 143(3); 37(1); 37

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1655 / KOL / 2016 ASSESSMENT YEAR :2013-14 DCIT, CENTRAL CIRCLE- 1(3), AAYAKAR BHAWAN, POORVA,3 RD FLOOR,110, SHANTIPALLY, KOLKATA-107 V/S . M/S BONAI INDUSTRIAL CO. LTD., 8A, EXPRESS TOWER, 42A SHAKESPEARE SARAN, KOLKATA-12 [ PAN NO.AAACB 9156 F ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI ARINDAM BHATTACHERJEE, ADDL. CIT-DR /BY RESPONDENT SHRI SUBASH AGARWAL, ADVOCATE /DATE OF HEARING 04-01-2018 /DATE OF PRONOUNCEMENT 09-02-2018 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST OUT OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-20, KOLKATA DA TED 23.05.2016. ASSESSMENT WAS FRAMED BY DCIT, CENTRAL CIRCLE-1(3), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 28.01.2016 FOR ASSESSMENT YEAR 2013-14. THE R EVENUE HAS RAISED FOLLOWING GROUND:- (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD . CIT(A) IS ERRED IN DELETING THE DISALLOWANCES AS THE OVERLOADING CHARG ES IS NOTHING BUT A PEE AS PER PROVISION OF SECTION 73 OF THE INDIAN RA ILWAY ACT, 1989. ITA NO.1655/KOL/2016 A.Y. 2013-14 DCIT, C-1(3), KOL. VS. M/S BONAI IND USTRIAL CO. LTD. P AGE 2 (2) THE APPELLANT CRAVE THE LEAVE TO MAKE ANY ADDIT ION, ALTERATION, AND MODIFICATION ETC. OF GROUND OR GROUNDS ON OR BEFORE THE DATE OF HEARING OF THE APPEAL. SHRI ARINDAL BHATTACHERJEE, LD. DEPARTMENTAL REPRES ENTATIVE APPEARED ON BEHALF OF REVENUE AND SHRI SUBASH AGARWAL, LD. ADVO CATE APPEARED ON BEHALF OF ASSESSEE. 2. SOLE ISSUE RAISED BY REVENUE IN THIS APPEAL IS T HAT LD. CIT(A) ERRED IN DELETING THE DISALLOWANCES MADE BY THE ASSESSING OF FICER FOR 32,63,552/- PAID TO INDIA RAILWAYS (IR) FOR OVERLOADING CHARGES . 3. BRIEFLY, THE FACTS ARE THAT ASSESSEE IN THE PRES ENT CASE IS A LIMITED COMPANY AND ENGAGED IN MINING ACTIVITIES. THE ASSES SEE IN THE YEAR UNDER CONSIDERATION HAS CLAIMED EXPENSE UNDER THE HEAD F REIGHT AND TRANSPORT CHARGES WHICH WAS INCLUSIVE OF PUNITIVE CHARGES PA ID TO IR. THE ASSESSEE EXPLAINED THAT THE PUNITIVE CHARGES WERE PAID TO TH E IR ON ACCOUNT OF EXCESS QUANTITY LOADED IN THE WAGONS OF IR. HOWEVER, THE A SSESSING OFFICER OBSERVED THAT PUNITIVE CHARGES ARE PAID TO IR ON ACCOUNT OF CONTRAVENTION OF LAW / RULES. THEREFORE, HE WAS OF THE VIEW THAT SUCH EXPENSE CAN NOT BE ALLOWED AS DEDUCTION AS PER EXPLANATION-1 TO SEC. 37(1) OF THE ACT. THUS, THE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME O F ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO DELETED THE ADDITION MADE BY AO BY OBSERVING AS UND ER:- I HAVE CONSIDERED THE FINDING OF THE AO ON THIS ISS UE IN THE ASSESSMENT ORDER AND THE SUBMISSION MADE BY THE AR DURING THE APPELL ATE PROCEEDINGS. I FIND THAT MY PREDECESSOR HAS GIVEN A DETAILED FINDING ON THIS ISSUE IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER IN APPEAL NO.249/CC- 1(3)/CIT(A)-20/13-14 DATED 11-12-2014 WHICH IS REPR ODUCED AS UNDER: 'I FIND FROM THE IMPUGNED ORDER THAT THE ASSESSEE HAD EXPLA INED AT THE ASSESSMENT STAGE THAT THE RAILWAYS PUNITIVE CHARGES WERE NOT P AID FOR ANY PURPOSE WHICH WAS AN OFFENCE OR WHICH WAS PROHIBITED BY LAW BUT I T WAS ONLY IN THE TERMINOLOGY OF THE RAILWAYS THAT IT WAS CALLED PUNI TIVE CHARGES. IT APPEARS FROM THE MATERIAL PLACED ON RECORD THAT DUE TO THE ABSEN CE OF WEIGHTMENT BRIDGE AT THE LOADING POINT, THE GOODS ARE LOADED IN RAILW AY WAGON ON THE BASIS OF SOME ESTIMATE AND THE EXACT WEIGHT IS MEASURED ENRO UTE BY THE RAILWAYS WHEN THE LOADED WAGON ACTUALLY GOES TO THE WEIGHTME NT BRIDGE. IN CASE THE LOAD IS FOUND IN EXCESS OF THE PERMISSIBLE CARRYING CAPACITY, THEN THE RAILWAYS ITA NO.1655/KOL/2016 A.Y. 2013-14 DCIT, C-1(3), KOL. VS. M/S BONAI IND USTRIAL CO. LTD. P AGE 3 RECOVER ADDITIONAL FREIGHT WHICH IN ITS TERMINOLOGY IS CALLED PUNITIVE CHARGES. IT APPEARS FROM THE NOTIFICATION ISSUED BY THE MINISTR Y OF RAILWAYS THAT THE PUNITIVE CHARGES FOR OVERLOADING ARE ACTUALLY IN TH E NATURE OF ADDITIONAL FREIGHT FOR TRANSPORTING GOODS BEYOND THE PERMISSIBLE CARRY ING CAPACITY WHICH CANNOT BE CATEGORISED AS PUNISHMENT FOR ANY OFFENCE OR INF RINGEMENT OF LAW. IN CASE THERE WAS ABSENCE OF WEIGHTMENT BRIDGE AT THE LOADI NG STATION AND THE GOODS WERE LOADED BY ESTIMATE, THEN OVERLOADING OF WAGONS CANNOT POSSIBLY BE AVOIDED AND SUCH OVERLOADING BEING APPARENTLY COMMO N IS ACTUALLY PERMITTED BY THE RAILWAYS ON OVERLOADING CHARGES TERMED IN IT S TERMINOLOGY AS PUNITIVE CHARGES. I THEREFORE FIND MERIT IN THE CONTENTION O F THE LD AR THAT THE PUNITIVE CHARGES ARE COMPENSATORY IN NATURE FOR TRANSPORTING GOODS BEYOND THE PERMISSIBLE CARRYING CAPACITY AND SUCH CHARGES MAY IN THE TERMINOLOGY OF THE RAILWAYS BE CALLED PUNITIVE CHARGES BUT IN COMMERCI AL PARLANCE IT IS NOT IN THE NATURE OF PENALTY FOR INFRACTION OF LAW. THE OVERLO ADING CHARGES PAID TO THE RAILWAYS MAY IN ITS TERMINOLOGY BE TERMED AS PUNITI VE CHARGES BUT SUCH PAYMENTS APPEAL TO BE ROUTINE PAYMENTS IN THE NATUR E OF ADDITIONAL FREIGHT CHARGES FOR OVERLOADING OF WAGONS AND SUCH PAYMENTS ARE MADE IN ACCORDANCE WITH LAW AS PROVIDED IN THE NOTIFICATION DATED THE 23RD DECEMBER 2005 ISSUED BY THE MINISTRY OF RAILWAYS. IT ALSO AP PEARS FROM THE NOTIFICATION OF THE MINISTRY OF RAILWAYS THAT THERE IS NO PROVIS ION FOR CRIMINAL ACTION OR PROSECUTION OR CONFISCATION OF GOODS FOR OVERLOADIN G OF WAGONS. I AM OF THE CONSIDERED VIEW THAT THE ACTIVITIES OF THE RAILWAYS ARE COMMERCIAL IN NATURE AND FREIGHTS ARE FIXED ON COMMERCIAL BASIS AND MERE LY BECAUSE THE RAILWAYS IS A GOVERNMENT OWNED INSTITUTION, THE NATURE OF OVERL OADING CHARGES WHICH ARE ESSENTIALLY OF COMMERCIAL NATURE CANNOT BE CHARACTE RIZED AS PENALTY IRRESPECTIVE OF THE NOMENCLATURE GIVEN TO SUCH CHAR GES BY THE RAILWAYS. IT ALSO APPEARS THAT OVERLOADING OF WAGONS IS NOT A DELIBER ATE ACT ON THE PART OF THE ASSESSEE BUT DUE TO LACK OF INFRASTRUCTURE AT THE L OADING STATION. I ALSO FIND THAT THE ISSUE IS SQUARELY COVERED BY THE VARIOUS JUDICI AL DECISIONS PLACED ON RECORD BY THE LD AR IN COURSE OF THE APPELLATE PROC EEDINGS. THE HON'BLE SUPREME COURT HAS IN THE CASE OF MAHALAXMI SUGAR MI LLS CO (1980) 123 ITR 429 LAID DOWN THE BASIC PRINCIPLE FOR DECIDING AS T O WHETHER A CLAIM OF DAMAGES OR PENALTY WAS ALLOWABLE U/S 37(1) : 'WHENEVER ANY STATUTORY IMPOST PAID BY AN ASSESSEE BY WAY OF DAMAGES OR PENALTY OR INTEREST IS CLAIMED AS AN ALL OWABLE EXPENDITURE U/S 37(1) OF THE INCOME TAX ACT, THE ASSESSING AUTH ORITY IS REQUIRED TO EXAMINE THE SCHEME OF THE PROVISIONS OF THE RELEVAN T STATUTE PROVIDING FOR PAYMENT OF SUCH IMPOST NOTWITHSTANDING THE NOME NCLATURE OF THE IMPOST AS GIVEN BY THE STATUTE, TO FIND WHETHER IT IS COMPENSATORY OR PENAL IN NATURE. THE AUTHORITY HAS TO ALLOW DEDUCTI ON U/S 37(1) OF THE INCOME TAX ACT WHENEVER SUCH EXAMINATION REVEALS TH E CONCERNED IMPOST TO BE PURELY COMPENSATORY IN NATURE'. THE HON'BLE SUPREME COURT REITERATED THE SAME LEGAL POSITION IN THE CASE OF PRAKASH COTTON MILLS PVT LTD (1993) 201 ITR 684. IN THE CASE OF HERO CYCLES LTD 178 TAXMAN 484, THE HON'BLE PUNJAB & HARYANA HI GH COURT ALLOWED THE DEDUCTION OF THE AMOUNT PAID TO THE ELECTRICITY BOA RD AS PENALTY FOR VIOLATION OF POWER REGULATIONS, I.E. EXTRA CHARGES PAID FOR DRAW ING EXTRA LOAD IN PEAK HOURS. IN THE CASE OF WESTERN COALFIELDS LTD (2009) 124 TTJ (NAG) 659, THE ITA NO.1655/KOL/2016 A.Y. 2013-14 DCIT, C-1(3), KOL. VS. M/S BONAI IND USTRIAL CO. LTD. P AGE 4 HON'BLE ITAT, NAGPUR BENCH UNDER IDENTICAL FACTS AN D CIRCUMSTANCES HELD THAT THE OVERLOADING CHARGES WERE ESSENTIALLY COMME RCIAL IN NATURE AND CANNOT BE CHARACTERIZED AS PENALTY IRRESPECTIVE OF THE NOMENCLATURE GIVEN TO SUCH CHARGES BY THE RAILWAYS. THE HON'BLE ITAT HAS HELD THAT 'AS REGARDS OVERLOADING CHARGES, WE HAVE TO TAKE INTO CONSIDERA TION THE ENVIRONMENT IN WHICH THE COMPANIES ARE OPERATING. RAILWAY IS THE O NLY MODE OF TRANSPORTATION IF THE PERSON WISHES TO TRANSPORT IT S PRODUCT THROUGH RAILWAY. THIS FACT IS IMPORTANT BECAUSE SUCH ACTIVITIES OF R AILWAYS ARE OF COMMERCIAL IN NATURE AND FREIGHTS ARE FIXED ON COMMERCIAL BASIS. IF WE LOOK THE ISSUE IN ITS PERSPECTIVE, THEN, WHAT EMERGES IS THAT IF THERE WE RE PRIVATE CARRIERS ALSO AND IF THE ASSESSEE WOULD HAVE PAID IDENTICAL CHARGES TO THEM, THE SAME WOULD HAVE BEEN ALLOWED AS A NORMAL BUSINESS EXPENDITURE ESPECIALLY WHEN THERE IS NO DISPUTE THAT THESE EXPENSES HAVE BEEN INCURRED I N THE COURSE OF BUSINESS OPERATIONS AND, THEREFORE, MERELY BECAUSE THE RAILW AYS IS A GOVERNMENT OWNED INSTITUTION AND WORKS UNDER AN ACT OF PARLIAM ENT, AND NATURE OF OVERLOADING CHARGES WHICH ARE ESSENTIALLY OF COMMER CIAL NATURE CANNOT BE CHARACTERIZED AS OF PENAL NATURE IRRESPECTIVE OF NO MENCLATURE GIVEN TO SUCH CHARGES BY THE RAILWAYS. FURTHER, IT IS NOT IN DISP UTE THAT THE QUANTITY TREATED AS OVERLOADING HAS BEEN UNLOADED BY THE RAILWAYS NO R IT HAS BEEN A CASE OF VIOLATION OF SAFETY RULES/NORMS, HENCE, THE OVERLOA DING SO INCURRED CANNOT BE EQUATED WITH TRAVELLING WITHOUT TICKET, HENCE, THE SAID CONTENTIONS OF THE LD DR ARE REJECTED. IT IS ALSO NOTED THAT SUCH OVERLOA DING IS NOT CORRECT DUE TO A DELIBERATE ACT ON THE PART OF THE ASSESSEE BUT DUE TO LACK OF INFRASTRUCTURE AND NATURE OF COMMODITY, HENCE, THE RATIO OF THE DECISI ON OF THE HON 'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HERO CYCLES LTD ( SUPRA) IS SQUARELY APPLICABLE. IT IS ALSO A SETTLED JUDICIAL PRINCIPAL THAT SUBSTANCE OF THE MATTER SHOULD BE LOOKED INTO AND BE GIVEN TO THE NOMENCLAT URE GIVEN BY THE RAILWAY TO SUCH CHARGES. THE OBJECT OF EXPLANATION 1 ALSO S UPPORTS THE CLAIM OF THE ASSESSEE AS THESE EXPENSES ARE NOT OF THE NATURE OF ANY ILLEGAL/UNLAWFUL EXPENDITURE. IN THE CASE OF M/S TAURIAN IRON & STEE L CO (P) LTD (ITA NO.847 & 1613/M/2010), THE HON'BLE ITAT 'D' BENCH, MUMBAI HA S HELD THAT THE PUNITIVE CHARGES PAID TO THE RAILWAYS FOR OVERLOADING OF WAG ONS IS COMPENSATORY IN NATURE AND THEREFORE THE PROVISIONS CONTAINED IN EX PLANATION TO SECTION 37(1) ARE NOT ATTRACTED. THE HON'BLE ITAT HAS HELD THAT' IN THE INSTANT CASE AS WE HAVE ALREADY HELD EARLIER THAT THE PUNITIVE CHARGES PAID BY THE ASSESSEE TO RAILWAYS FOR OVERLOADING OF THE WAGONS IS COMPENSAT ORY IN NATURE, THEREFORE, THE SAME CANNOT BE DISALLOWED BY INVOKING THE PROVI SIONS OF EXPLANATION TO SECTION 37(1) OF THE ACT'. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT OVERLOADING CHARGES IRRESPECTIVE OF THE NOMENC LATURE GIVEN BY THE RAILWAYS ARE ESSENTIALLY OF COMMERCIAL NATURE WHICH CANNOT BE CHARACTERIZED AS PENALTY AND THAT SUCH CHARGES ARE COMPENSATORY I N THE NATURE OF ADDITIONAL FREIGHT FOR OVERLOADING OF WAGONS WHICH IS EXPLICIT LY PERMITTED BY THE RAILWAYS AND THE PAYMENTS ARE MADE IN ACCORDANCE WITH LAW AS PROVIDED BY THE NOTIFICATION OF THE MINISTRY OF RAILWAYS. THE PUNIT IVE CHARGES PAID TO THE RAILWAYS CANNOT BE CHARACTERIZED AS EXPENDITURE INC URRED FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW A ND THEREFORE THE EXPLANATION TO SECTION 37(1) IS NOT ATTRACTED. IN V IEW OF THE ABOVE, IT IS TO BE HELD THAT THE DISALLOWANCE OF RS.24,09,972/- AS MAD E BY THE AO IN THE IMPUGNED ORDER IS NOT SUSTAINABLE IN LAW THEREFORE ON THE FACTS OF THE CASE THE ADDITION OF RS.24,09,972/- IS DELETED. GROUND NO 3 IS ALLOWED'. ITA NO.1655/KOL/2016 A.Y. 2013-14 DCIT, C-1(3), KOL. VS. M/S BONAI IND USTRIAL CO. LTD. P AGE 5 AGGRIEVED BY THIS, THE REVENUE HAS COME UP IN APPEA L BEFORE US. 5. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF AU THORITIES BELOW AS FAVOURABLE TO THEM. 6. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, ISSUE RELATES TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER FOR PUNI TIVE CHARGES PAID BY ASSESSEE TO THE IR. AT THE OUTSET, WE FIND THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES HON'BLE CO-ORDINATE BENCH OF THIS TRI BUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE IN THE CASE OF DCIT VS. RUGHTA MINES LTD. IN ITA NO.1653/KOL/2016 DATED 10.01.2018 AND RELEV ANT EXTRACT OF THE ORDER IS REPRODUCED BELOW:- 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. FEE GRADE & COMPANY PVT. LTD. IN IT(SS) A. NOS. 36 TO 38/KOL/2015 DATED 05.04.201 7 WHEREIN THIS TRIBUNAL TOOK THE VIEW THAT RAILWAY PUNITIVE CHARGES WERE NOT HIT BY EXPLANATION 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 BENC H IN THE CASE OF TAURIAN IRON & STEEL CO.(P) LTD (SUPRA). IN THE AFORESAID D ECISION 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 REVENU E. CONSEQUENTLY 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 FOLLO WING CONCLUSION :- THE OVERLOADING CHARGES PAID BY THE APPELLANT TO T HE 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 NOTIFICA TION OF MINISTRY OF RAILWAYS DATED 23.12.2005 PROVIDES A SCHEDULE IN WHICH 'SITU ATION A' AND SITUATION B PROVIDES THAT F THE AGGREGATED PAYLOAD IN A RAKE EX CEED THE COMBINED ITA NO.1655/KOL/2016 A.Y. 2013-14 DCIT, C-1(3), KOL. VS. M/S BONAI IND USTRIAL CO. LTD. P AGE 6 PERMISSIBLE CARRYING CAPACITY OF THE RAKE, THE PUNI TIVE CHARGES SHOULD BE LEVIED AS PER 'PART -I, 'PART-II, PART-ILL OF SITUA TIONS A & B' IT PROVIDES THAT IN CASE OF OVERLOADING UPTO1/2 TONNES, 'PUNITIVE CHARG ES ELIGIBLE ON THE ENTIRE WEIGHT OF LOADING BEYOND THE PERMISSIBLE CARRYING C APACITY SHALL BE NIL (AS PER DIFFERENT TABLES OF SITUATION A' AND SITUATION B' A ND IN CASE THE WEIGHT OF COMMODITY EXCEEDS THE PERMISSIBLE CARRYING CAPACITY . OF THE WAGON BY MORE THAN 1/2 TONNES, THE PUNITIVE CHARGES ELIGIBLE ON T HE ENTIRE WEIGHT LOADING BEYOND THE PERMISSIBLE CARRYING CAPACITY WOULD BE ' 2 TIMES THE FREIGHT RATES APPLICABLE TO THAT COMMODITY IN CASE OF SITUATION A ' AND 3 TIMES THE FREIGHT RATES APPLICABLE TO THE HIGHEST CLASS IN CASE OF SI TUATION 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 R AKE .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 23.1 2.2005, FOR CARRYING GOODS IN ITS RAKES ARE NOT 'FOR ANY PURPOSE WHICH IS AN OFFE NSE OR WHICH IS PROHIBITED BY LAW'. AS A MATTER OF FACT, THE INDIAN RAILWAYS ITSE LF PERMITS 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, 788/- 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 BEFOR E US IS CONCERNED THAT WAS THE CASE OF A SUIT FOR PERMANENT INJUNCTION AND DAM AGES, FILED AGAINST THE DEFENDANT FOR A PASSING OFF ACTION AND IN THE COURS E OF ITS JUDGEMENT THE HONBLE COURT MADE A REFERENCE REGARDING PURPOSE OF AWARDING PUNITIVE DAMAGES. THE SAID DECISION IS NOT OF ANY APPLICATIO N WHATSOEVER BE THE PRESENT CASE. THE DECISION OF THE HONBLE KARNATAKA HIGH CO URT IN THE CASE OF MAMTA ENTERPRISES(SUPRA) IS AGAIN A CASE WHERE THE CRIMIN AL OFFENCE WAS COMPOUNDED AND THE COMPOUNDING FEES WAS CLAIMED AS DEDUCTION. IN THE PRESENT CASE THERE IS NO OFFENCE WHATSOEVER AND THERE IS NO COMPOUNDI NG FEE PAID AND CLAIMED AS DEDUCTION. AS FAR AS THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF HAJI AZIZ AND ABDUL BROTHERS (SUPRA) IS CONCERNED I T WAS AGAIN THE CASE OF BREACH OF PENAL PROVISIONS OF CUSTOMS ACT FOR WHIC H FINE WAS PAID. UNDER THESE CIRCUMSTANCES, THE EXPENSES WERE NOT ALLOWED AS DED UCTION. 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 T HE REVENUE. ITA NO.1655/KOL/2016 A.Y. 2013-14 DCIT, C-1(3), KOL. VS. M/S BONAI IND USTRIAL CO. LTD. P AGE 7 WE RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF TH E TRIBUNAL DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) O N THIS ACCOUNT AND ACCORDINGLY THE GROUND TAKEN BY REVENUE IS REGRETTE D. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 09/ 02/2018 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP #- 09 / 02 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT,CC-1(3),AAYAKARBHAWAN, POORVA, 3 RD FL,110-SHANTIPALLY,KOL-107 2. /RESPONDENT-M/S BONAI INDUSTRIAL CO. LTD. 8A, EXPRE SS TDOWER, 42A SHAKESPEARE SARANI, KOLK ATA-12 3. / 0 / CONCERNED CIT KOLKATA 4. 0- / CIT (A) KOLKATA 5. 3 66/, /, / DR, ITAT, KOLKATA 6. 9 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO /,