Gouri Shankar Jain (HUF), Kolkata V. ITO,Ward-32(1). , Kolkata

ITA 233/KOL/2023

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9547 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-11-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 20-03-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37; 37(1); 250

Judgement Text

| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA BEFORE DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER & SHRI SONJOY SARMA, HON’BLE JUDICIAL MEMBER I.T.A. No. 233/Kol/2023 Assessment Year: 2014-15 Gouri Shankar Jain HUF C/o S.N. Ghosh & Associates, Advocates 2, Garstin Place 2 nd Floor, Suite No. 203 Off Hare Street Kolkata - 700001 [PAN: AACHG9644L] Vs Income Tax Officer, Ward – 32(1), Kolkata अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : Shri Somnath Ghosh, Advocate Revenue by : Shri P.P. Barman, Addl. CIT, Sr. D/R सुनवाई कᳱ तारीख/Date of Hearing : 22/11/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 13/12/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The above captioned appeal is directed at the instance of the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter the “ld. CIT(A)”) dt. 19/01/2023, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2014-15. 2. The sole grievance of the assessee is that the ld. CIT(A) erred in confirming the disallowance of Rs.31,156/- u/s 37(1) of the Act treating the same as penalty given to M/s. Indian Oil Corporation Ltd. (IOC Ltd.). 3. We have heard rival contentions and perused the record placed before us. The assessee is a HUF engaged in business. Income of Rs.15,08,400/- declared in the Income-tax return for Assessment Year 2014-15 filed on 29/11/2014. During the course of assessment 2 I.T.A. No. 233/Kol/2023 Assessment Year: 2014-15 Gouri Shankar Jain HUF proceedings carried out after conducting scrutiny under CASS, the ld. Assessing Officer noticed that the assessee has debited penalty of Rs.31,156/- paid to IOC Ltd.. As per the ld. Assessing Officer the said amount being in the nature of penalty was not allowable in view of Section 37 to Explanation 1 of the Act. The assessee filed failed to get any relief before the ld. CIT(A) also. 3.1. Before us, the ld. Counsel for the assessee has submitted that the assessee is engaged in the business of authorised oil dealer of IOC Ltd. and the alleged sum is not a penalty for an offence but it is the interest on delay in payment to IOC Ltd. and, therefore, is purely a business expenditure allowable u/s 37(1) of the Act. Reference made to the details of the interest for delayed payments made during the year along with a ledger account of assessee. in the books of IOC Company. Explanation (1) to Section 37 of the Act states that expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to be have been incurred for the purpose of business or provision and no deduction or allowance shall be made in respect of such expenditure. Now on examining the facts of the instant case pertaining to interest paid by the assesse on delayed payments, we notice that this is a part of the regular policy with IOC Ltd. with its dealers and in case there is some delay in payments as agreed between the two parties, interest is charged by IOC Ltd. from its dealers. It can be equated to the credit policies of the business concerns for its debtors/creditors wherein there is a delay in receiving the payment from debtors or making payment to the creditors, interest is charged/paid. Similar is the fact in the instant case and it is merely an interest on delay payments and cannot be equated from any angle as a 3 I.T.A. No. 233/Kol/2023 Assessment Year: 2014-15 Gouri Shankar Jain HUF penalty paid for an offence or if an act prohibited by law. We thus, set aside the finding of the ld. CIT(A) and allow the sole grounds raised by the assessee and hold that the alleged sum of Rs.31,156/- is a business expenditure allowable u/s 37(1) of the Act. 4. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 13 th December, 2023 at Kolkata. Sd/- Sd/- (SONJOY SARMA) (DR. MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 13/12/2023 *SC SrPs आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Assessee 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata