DCIT, Mohali V. M/s Infotel Satcom Pvt. Ltd., Mohali

ITA 851/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7573 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURINDER MEENA
• Assessee Lawyers: GAAYAN SETHI
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 851/CHD/2017 ASSESSMENT YEAR : 2012-13 THE DCIT, CIRCLE-6(1), VS. M/S INFOTEL SATCOM PVT L TD., MOHALI INDUSTRIAL AREA, PHASE VII,, MOHALI PAN NO. ABBCI6705L & C.O.NO. 64/CHD/2017 (IN ITA NO. 851/CHD/2017) ASSESSMENT YEAR : 2012-13 M/S INFOTEL SATCOM PVT LTD., VS. THE DCIT, CIRCLE 6(1), INDUSTRIAL AREA, PHASE VII,, MOHALI MOHALI PAN NO. ABBCI6705L (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SURINDER MEENA, JCI T RESPONDENT BY : SH. GAAYAN SETHI, ADVOCATE DATE OF HEARING : 23.05.2018 DATE OF PRONOUNCEMENT: 02.07 .2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THESE ARE CROSS APPEALS, ONE BY THE ASSESSEE AND OT HER BY THE DEPARTMENT PREFERRED AGAINST THE ORDER DATED 14.03. 2017 OF COMMISSIONER OF INCOME TAX (APPEALS)-2, GURGAON [HE REINAFTER REFERRED TO AS CIT(A)]. ITA NO.851/CHD/2017 & C.O.NO. 64/CHD/2017- M/S INFOTEL SATCPM PVT LTD, MOHALI 2 2. THE REVENUE IS AGGRIEVED BY THE ACTION OF CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON A CCOUNT OF INTEREST PAID ON DELAYED PAYMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD PAID AN AMOUNT OF RS. 40,25,538/- TO ANTRIX CORPORATION LTD AS INTEREST EXPENDITURE FOR DELAYED PAYMENT. THE ASSESSEE HAD B EEN UTILIZING THE SERVICES OF ANTRIX CORPORATION LTD, A FULLY OWNED C OMPANY OF DEPARTMENT OF SPACE, GOVERNMENT OF INDIA, FOR PROCU RING SPACE IN THE INSAT SYSTEM. THE ASSESSING OFFICER TREATED THE PAYMENT AS BEING EXPENDITURE FOR NON-BUSINESS PURPOSES. 4. THE LD. CIT(A) DELETED THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER OBSERVING AS UNDER:- 4.2 I HAVE GIVEN CAREFUL CONSIDERATION TO THE FACTUAL METRICS ABOVE AND FIND THAT CHARGING OF INTEREST ON THE DELAYED PAYMENT IS A REGULAR BUSINESS PRACTISE BECA USE IT EMERGES FROM A CONTRACT. THE PAYMENT IS IN THE NATU RE OF COMPENSATION FOR THE CREDITOR FOR THE REASON THAT T HE DEBTOR HAS RETAINED AMOUNT DUE BEYOND A PARTICULAR PERIOD. IN BUSINESS PARLANCE, IT IS THE QUICK FLOW OF MONEY WHICH MATTERS AND THERE IS A COST FOR MONEY. AN EAR LY RECOVERY/PAYMENT GETS DISCOUNTS AND ON THE OTHER HA ND, DELAYED PAYMENTS WOULD ENTAIL CHARGING OF INTEREST. THERE IS NOTHING UNUSUAL ABOUT THIS PRACTICE BEING FOLLOW ED IN THE BUSINESS TRANSACTIONS. THE ASSESSING OFFICER IS NOT JUSTIFIED IN SEGREGATING A SINGLE TRANSACTION MADE BY THE APPELLANT INTO TWO TRANSACTIONS, ONE FOR THE PAYMEN T OF SERVICES AND THE OTHER FOR PAYMENT OF INTEREST FOR DELAYED PAYMENT OF CHARGES. BOTH THESE TRANSACTIONS ARE INT EGRAL PART OF ONE TRANSACTION OF SERVICES AND THE APPELLA NT IS ITA NO.851/CHD/2017 & C.O.NO. 64/CHD/2017- M/S INFOTEL SATCPM PVT LTD, MOHALI 3 FULLY JUSTIFIED IN MAKING PAYMENT OF INTEREST ON DE LAYED PAYMENTS. ANY SUCH PAYMENT IS MADE FOR THE BUSINESS PURPOSES AND THE VIEW HELD BY THE ASSESSING OFFICER IS UNJUSTIFIED. THE GROUNDS OF APPEAL ARE ALLOWED. 5. AFTER HEARING THE LD. REPRESENTATIVES OF THE PAR TIES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE LD. CIT(A) HAS OBSERVED THAT THE DISCOUNT ON EARLIER PAYMENT AND I NTEREST ON DELAYED PAYMENT WAS A REGULAR FEATURE OF THE BUSINESS PRACT ICE AS IT EMERGED FROM THE CONTRACT. IT WAS NOT A PENALTY RATHER I T WAS INTERNAL PART OF THE TRANSACTION OF SERVICES, HENCE, THE SAME CONSTI TUTED BUSINESS EXPENSES. WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT(A) AND THE SAME IS, THEREFORE, UPHELD. THERE IS NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY D ISMISSED. C.NO. 64/CHD/2017 : 6. THE ASSESSEE HAS FILED THE CAPTIONED CROSS OBJEC TIONS WHICH ARE DELAYED BY159 DAYS. NO REASONABLE EXPLANATION HAS B EEN GIVEN FOR THE AFORESAID DELAY IN FILING THE CROSS OBJECTION. FURTHER, A PERUSAL OF THE CROSS OBJECTION REVEALS THAT THE ASSESSEE HAS J UST TRIED TO REBUT THE GROUNDS OF APPEAL TAKEN BY THE REVENUE AND NO SEPAR ATE RELIEF HAS BEEN CLAIMED IN THE CROSS OBJECTIONS. THE SAID CROS S OBJECTIONS ARE, THEREFORE, NOT MAINTAINABLE AND THE SAME ARE ACCORD INGLY DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTIONS OF THE ASSESSEE ARE HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.07.2018 SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO.851/CHD/2017 & C.O.NO. 64/CHD/2017- M/S INFOTEL SATCPM PVT LTD, MOHALI 4 DATED : 02.07.2018 RKK COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR