M/s Kiran Roadlines, GANDHIDHAM V. The Assistant Commr. of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 27/RJT/2019

AI Insights

The case involves M/s. Kiran Roadlines, a firm engaged in transportation, which appealed against the order of the Commissioner of Income Tax (Appeals) - 3, Rajkot. The dispute centered on the addition of Rs.6,09,100 to the assessee's income, which was paid as overloading charges. The Assessing Officer (AO) had treated these charges as penal in nature under the Motor Vehicles Act, 1988, and thus not allowable as a business expense under Section 37 of the Income Tax Act. However, previous rulings in similar cases for A.Y. 2004-05 & 2005-06 had allowed such deductions, leading to the current appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299794 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 13-02-2019
• Other Referred Cases: M/s. Kiran Roadlines vs. ACIT for A.Y. 2003-04, 2004-05 & 2005-06
• Laws Referred To: Income Tax Act, 1961, Motor Vehicles Act, 1988
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “RAJKOT” BENCH, RAJKOT [Conducted through E-Court at Ahmedabad] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No. 27/Rjt/2019 ( नधा रण वष / A ss es sment Year : 2014-15) M/ s . Ki r a n R o a dli ne s “ K ir a n Ho us e” , P. O . B ox N o. 2 3 4, P lo t No .8 , Se c to r N o. 8, G a n dh id ha m बनाम/ Vs . A s sis t a nt C o m m is s io ner o f In co m e T ax G a nd h id ha m C i r c le , G a nd h id ha m थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A A K FK 1 6 4 0 C (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Mehul Ranpura, A.R. यथ क ओर से / Respondent by : Shri B. D. Gupta, Sr. D.R. स ु नवाई क तार ख / D a t e o f H e a r i ng 02/01/2023 घोषणा क तार ख /D a t e o f P ro n o u nc e me n t 03/01/2023 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal at the instance of the Assessee is directed against the order dated 26.12.2018 passed by the passed by the Commissioner of Income Tax (Appeals) – 3, Rajkot (‘the CIT(A)’), arising out of the ITA No. 27/Rjt/2019 (M/s. Kiran Roadlines vs. ACIT) A.Y. 2014-15 - 2- assessment order dated 05.09.2016 passed by the Learned ACIT, Gandhidham Circle, Gandhidham-Kutch, under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2014-15. 2. The short point involved in this matter is this that as to whether the addition of Rs.6,09,100/- on account of overloading expenses is sustainable in the eye of law. 3. The assessee has paid Rs.6,09,100/- as overloading challan. The same has been considered to be an offence committed with the knowledge or under the orders of the owner as per Motor Vehicles Act, 1988 and the said overloading charges / challans are penal charges and levied for infringement of law and rules of the State specifying the permissible capacity. Ld. AO further stated that as per provision of explanation to Section 37 of the Act, any expenditure incurred by an assessee for any purpose which is an offence or prohibited by law shall not be deemed to have been incurred for the purpose of business and no deduction shall be allowed. The First Appellate Authority confirmed the said addition. Hence, the instant appeal before us. 4. At the time of hearing of the instant appeal, the Ld. Counsel appearing for the assessee submitted before us that the issue is covered in favour of the assessee in assessee’s own case for A.Y. 2003-04, 2004-05 & ITA No. 27/Rjt/2019 (M/s. Kiran Roadlines vs. ACIT) A.Y. 2014-15 - 3- 2005-06. In this regard, he has relied upon certain judgments passed by the Co-ordinate Bench in assessee’s own case. 5. The assessee is a registered firm in the business of transportation. It appears that for A.Y. 2004-05 & 2005-06 identical penalty debited to P&L account has been allowed by he Ld. CIT(A). In appeal preferred before the ITAT by the Revenue dated 06.03.2009, the Hon’ble Bench has been pleased to restore this issue to the file of the Ld. AO to verify the facts whether, if the assessee carried excess load and if the penalty is imposed by the RTO not for payment towards infringement of law but as fine collected by him, the same was directed to be allowed. Upon which, on 09.12.2010, after considering the receipts by the RTO, the Ld. Addl.CIT, Gandhidham Range came to a finding that same was paid as fine and has been debited as penalty in the books of accounts. In that view of the matter, the Ld. Addl.CIT was of the opinion that even if such amount was paid as penalty still the same is clearly a compensatory levy and, therefore, same cannot be disallowed under Section 37 of the Act. Finally, the same was, therefore, decided in favour of the assessee. The copy of each of orders passed by the Co-ordinate Bench dated 06.03.2009, order dated 09.12.2010 passed by the Addl.CIT, Gandhidham Range and the consequential order passed under Section 143(3) r.w.s. 254 of the Act by the Ld. ACIT, Gandhidham Circle, Gandhidham-Kutch has been placed on record before us annexing the same in the paper book, considering which, we do not hesitate to conclude that Rs.6,09,100/- in respect of overloading paid by the appellant is an ITA No. 27/Rjt/2019 (M/s. Kiran Roadlines vs. ACIT) A.Y. 2014-15 - 4- allowable expenses under Section 37 of the Act. Therefore, the same is allowed in favour of the assessee. 6. In the result, the appeal of assessee is allowed. This Order pronounced on 03/01/2023 Sd/- Sd/- (SHRI WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 03/01/2023 S. K. SINHA True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं%धत आयकर आय ु 'त / Concerned CIT 4. आयकर आय ु 'त(अपील) / The CIT(A)- 5. *वभागीय -त-न%ध, आयकर अपील य अ%धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड3 फाईल / Guard file. By order/आदेश से, D e p u t y / A s s t t . R e g i s t r a r I T A T , R a j k o t