DCIT, CC-1(3), Kolkata, Kolkata V. M/s Feegrade & Company Pvt. Ltd., Kolkata

ITSSA 36/KOL/2015

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3288 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 20-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 20-02-2015
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Capital asset; Business expenditure; Earning of tax free income; Revenue expenditure; Capital expenditure
• Section: 153A; 14A; 260A; 37(1); 37; 132

Judgement Text

1 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & M.BALAGA NESH, AM ] IT(SS)A NOS.36 TO 38/KOL/2015 ASSESSMENT YEARS : 2010-11, 2011-12 & 2012-13 D.C.I.T., CENTRAL CIRCLE-1(3), -VERSUS- M/S. FEEGR ADE & COMPANY PVT.LTD. KOLKATA KOLKATA (PAN:AAACF 6825 D) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI G.MALLIKARJUNA, CIT(DR) FOR THE RESPONDENT: SHRI SUBASH AGARWAL, ADVOCATE DATE OF HEARING : 20.03.2017. DATE OF PRONOUNCEMENT : 05.04.2017. ORDER PER N.V.VASUDEVAN, JM: THESE ARE APPEALS BY THE REVENUE AGAINST THREE ORD ERS ALL DATED 08.12.2014 OF CIT(A)-20, KOLKATA RELATING TO A.Y.2010-11, 2011- 12 & 2012-13. SINCE THE COMMON ISSUES ARE INVOLVED IN THESE THREE APPEALS T HEY WERE HEARD TOGETHER AND WE DEEM IT CONVENIENT TO PASS A CONSOLIDATED ORDER. IT(SS)A.36/KOL/2015 (A.Y.2010-11) 2. GROUND NO.1 RAISED BY THE REVENUE READS AS FOL LOWS :- (1) IN THE FACTS AND CIRCUMSTANCES. OF THE CASE, L D CIT(A) IS ERRED IN DELETING THE DISALLOWANCE AS THE OVERLOADING CHARGES IS NOTH ING 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 T HE BUSINESS OF MINING. IT IS PART OF THE RUNGTA GROUP OF CASES. THERE WAS A SEARCH AND S EIZURE OPERATION CARRIED OUT BY THE REVENUE U/S 132 OF THE INCOME TAX ACT, 1961 (ACT) O N 06.02.2012 IN THE RESIDENTIAL AND BUSINESS PREMISES OF VARIOUS PERSONS BELONGING TO THE RUNGTA GROUP OF CASES. THE ASSESSEE BEING PART OF RUNGTA GROUP WAS ALSO SUBJEC TED TO A SEARCH U/S 132 OF THE ACT AT ITS OFFICE PREMISES ON 06.02.2012. CONSEQUENT TO THE SEARCH, A NOTICE U/S 153A OF THE ACT DATED 04.02.2013 WAS ISSUED TO THE ASSESSEE BY THE ASSESSING OFFICER (AO) 2 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 CALLING UPON THE ASSESSEE TO FURNISH RETURN OF INCO ME FOR A.Y.2006-07 TO 2011-12. AS FAR AS A.Y.2010-11 IS CONCERNED THE ASSESSEE HAD AL READY FILED RETURN OF INCOME U/S 139(1) OF THE ACT ON 31.10.2010 DECLARING TOTAL INC OME OF RS.173,89,34,527/-. THE ASSESSEE FILED A RETURN IN RESPONSE TO NOTICE U/S 1 53A OF THE ACT DECLARING THE SAME INCOME AS WAS DECLARED IN THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED FROM A BUNCH OF LOOSE SHEETS SEIZED IN THE COURSE OF SEARCH AND MARKED AS RH-31 WHICH WERE RECEIPTS RELATING TO PAYMENT OF RAILWAY PUNITIVE CHARGES. THESE CHARGES TOTALLED A SUM OF RS.33,02,103/- AND FORMED PART OF THE FREIGHT AND T RANSPORTING EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT. ACCORDING TO THE AO THESE CHARGES WERE IN THE NATURE OF EXPENSES INCURRED FOR ANY PURPOSE WHICH IS AN OFFEN CE OR WHICH IS PROHIBITED BY LAW AND THEREFORE OUGHT NOT TO HAVE BEEN ALLOWED AS A D EDUCTION WHILE COMPUTING THE INCOME FROM BUSINESS AS PER THE PROVISION OF EXPLAN ATION TO SECTION 37(1) OF THE ACT. SECTION 37 (1) OF THE ACT PROVIDES THAT ANY EXPENDITURE (NOT B EING EXPENDITURE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENSES OF THE ASSESSEE), LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS 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. THE STAND OF THE ASSESSEE WAS THAT THESE PAYMENTS W ERE NOT IN THE NATURE OF PENALTY FOR INFRINGEMENT OF LAW AND WERE PURELY IN THE NATURE O F COMPENSATORY CHARGES AND THEREFORE CANNOT BE DISALLOWED UNDER EXPLANATION TO SECTION 37(1) OF THE ACT. THE ASSESSEE EXPLAINED THE NATURE OF RAILWAY PUNITIVE C HARGES THAT THE CHARGES THOUGH CALLED PUNITIVE CHARTES IN THE TERMINOLOGY OF THE R AILWAYS DID NOT ACTUALLY RELATE TO ANY OFFENCE OR INFRINGEMENT OF LAW, ON THE CONTRARY , IT WAS IN THE NATURE OF ADDITIONAL FREIGHT ON OVERLOAD OF GOODS BEYOND THE PERMISSIBLE LIMIT. THE ASSESSEE SUBMITTED 3 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 THAT THE GOODS ARE LOADED FOR DESPATCH TO CUSTOMERS THROUGH RAILWAY WAGONS. WHEN THE ASSESSEE LOADS THE GOODS FOR DESPATCH THROUGH R AILWAY 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 WHEN IT A CTUALLY GOES TO THE WEIGHING BRIDGE. IN CASE IT IS FOUND THAT THE GOODS WERE LOA DED IN EXCESS THAN THE PERMISSIBLE LOAD, IT CANNOT BE UNLOADED. THE RAILWAYS HOWEVER R ECOVER PUNITIVE CHARGES FOR SUCH OVERLOADING AS ADDITIONAL FREIGHT WHICH IS ONLY COM PENSATORY IN NATURE. THE ASSESSEE REITERATED THAT OVERLOADING CHARGES WERE NOT IN THE NATURE OF PUNISHMENT FOR VIOLATION OR INFRACTION OF LAW BUT BY WAY OF COMPENSATION FOR PERMITTING TO OVERLOAD THE GOODS BEYOND THE PERMISSIBLE LIMIT; MOREOVER, THERE IS NO PROVISION FOR CRIMINAL ACTION OR PROSECUTION OR CONFISCATION OF GOODS FOR OVERLOADIN G. IT WAS ARGUED THAT IN FACT OVERLOADING WAS VERY COMMON WHICH WAS PERMITTED BY THE RAILWAYS ON ADDITIONAL FREIGHT TERMED AS PUNITIVE CHARGES. THE ASSESSEE AL SO SUBMITTED THAT OVERLOADING OF WAGONS WAS NOT A DELIBERATE ACT ON THE PART OF THE ASSESSEE BUT WAS BASICALLY DUE TO THE LACK OF INFRASTRUCTURAL FACILITY AT THE LOADING STA TION. IN CASE THE WEIGHTING BRIDGE WAS AVAILABLE AT THE LOADING STATION, THEN OVERLOADING OF WAGONS COULD HAVE BEEN EASILY AVOIDED. THE ASSESSEE ALSO RELIED ON NOTIFICATION D ATED THE 23RD DECEMBER 2005 (TO BE PUBLISHED IN GAZETTE OF INDIA, PART-II, SECTION 3(I) OF THE GAZETTE OF INDIA) ISSUED BY THE MINISTRY OF RAILWAYS WHEREIN PUNITIVE CHARGES F OR OVERLOADING HAS BEEN DEFINED IN PARA 3 AS : 'WHERE THE COMMODITIES ARE OVER-LOADED IN A 8-WHEEL ED 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. 4 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 THE ASSESSEE THUS ARGUED THAT THE VERY HEADING OF P ARA 3 OF THE SAID NOTIFICATION 'ISSUED BY THE MINISTRY OF RAILWAYS NAMELY 'PUNITIVE CHARGES FOR OVERLOADING' MAKES IT AMPLY CLEAR THAT SUCH CHARGES WERE ACTUALLY IN T HE NATURE OF ADDITIONAL FREIGHT FOR OVERLOADING BEYOND THE PERMISSIBLE CARRYING CAPACIT Y AND WERE NOT IN THE NATURE OF PENALTY FOR ANY OFFENCE OR INFRINGEMENT OF LAW. THE CHARGES WERE IN FACT COMPENSATORY IN NATURE FOR TRANSPORTATION OF GOODS LOADED BEYOND THE PERMISSIBLE CARRYING CAPACITY AND IT WAS ONLY IN THE TERMINOLOG Y OF THE RAILWAYS THAT SUCH CHARGES ARE CALLED PUNITIVE CHARGES BUT IN COMMERCIAL PARLA NCE IT IS NOT IN THE NATURE OF PENALTY FOR INFRACTION OF LAW. THEREFORE EXPLANATION TO SEC TION 37(1) OF THE ACT WILL NOT APPLY TO SUCH CHARGES. 5. IN SUPPORT OF THE CLAIM OF ASSESSEE THE ASSES SEE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS HELD THAT RA ILWAY PUNITIVE CHARGES WERE COMPENSATORY PAYMENTS AND CANNOT BE DISALLOWED UNDE R EXPLANATION TO SECTION 37(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 6. THE AO DID NOT AGREE WITH THE SUBMISSIONS OF TH E ASSESSE IN THIS REGARD. ON APPEAL BY THE ASSESSEE CIT(A) HOWEVER HELD FOLLOWING THE D ECISION OF MUMBAI BENCH OF ITAT IN THE CASE OF M/S. TAURIAN IRON & STEEL CO. ( P)LTD. (SUPRA) THAT THE PAYMENT WAS COMPENSATORY IN NATURE AND CANNOT BE DISALLOWED UNDER EXPLANATION TO SECTION 37(1) OF THE ACT. 7. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE H AS PREFERRED GROUND NO.1 BEFORE THE TRIBUNAL. 8. AT THE TIME OF HEARING OF THE APPEAL IT WAS FA IRLY ACCEPTED BY THE PARTIES THAT THE ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS SQUAR ELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF TAURIAN IRON & STEEL CO.(P)LTD 5 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 (SUPRA). IN THE AFORESAID DECISION THE HONBLE ITAT AFTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRAKASH CO TTON MILLS P.LTD. 201 ITR 684 (SC) AND ALSO THE NATURE OF RAILWAY PUNITIVE CHARGE S HELD THAT THE PAYMENTS MADE TO THE RAILWAYS FOR OVERLOADING OF THE WAGONS IS COMPE NSATORY IN NATURE AND CANNOT BE DISALLOWED UNDER EXPLANATION TO SECTION 37(1) OF TH E ACT. THE OTHER DECISIONS RELIED UPON BY THE ASSESSEE SUPPORTS THE PLEA OF THE ASSES SEE AND WHERE THE DECISIONS 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. CONSEQUENTLY THE SAME IS DISMISSED. 9. GROUND NO.2 RAISED BY THE REVENUE READS AS FO LLOWS :- (2) IN THE FACTS AND CIRCUMSTANCES AND LAW POINT O F THE CASE LD. CIT(A) IS ERRED IN DELETING THE ADDITION U/S 14A WITHOUT GOING INT O THE PROVISION OF IT ACT AND IT RULE. 10. AS FAR AS GROUND NO. 2 RAISED BY THE REVENUE IS CONCERNED THE FACTS ARE THAT THE ASSESSEE EARNED INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND THEREFORE EXPENDITURE INCURRED BY THE ASSESSEE TO EARN SUCH I NCOME HAD TO BE DISALLOWED WHILE COMPUTING INCOME FROM BUSINESS AS REQUIRED UNDER TH E PROVISION OF SECTION 14A READ WITH RULE 8D OF IT RULES 1962 (RULES). 11. THE AO MADE DISALLOWANCE U/S 14A OF THE ACT AS FOLLOWS :- DISALLOWANCE UNDER CLAUSE (I) DISALLOWANCE UNDER CLAUSE (II) SL. PARTICULARS AMOUNT A AMOUNT OF EXPENDITURE BY WAY OF INTEREST 32962474 B AVERAGE INVESTMENT INCOME FROM WHICH SHALL NOT FO RM PART OF TOTAL INCOME (I.E. C OF CLAUSE III BELOW) 45000000 (I) TOTAL ASSET AS ON THE 1 ST DAY OF THE PREVIOUS YEAR 4807332117 (II) TOTAL ASSET AS ON THE LAST DAY OF THE PREVIOUS YEAR 5772221441 C AVERAGE OF (I) & (II) 5289776779 6 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 DISALLOWANCE UNDER CLAUSE (II) 280411 DISALLOWANCE UNDER CLAUSE (III) SL. PARTICULARS AMOUNT (A) TOTAL INVESTMENT (OPENING) 45000000 (B) TOTAL INVESTMENT (CLOSING) 45000000 (C) AVERAGE INVESTMENT (A+B)/2) 45000000 (D) INDIRECT EXPENSE DISALLOWANCE @0.50% OF (C) 225000 TOTAL DISALLOWANCE : CLAUSE (I)+(II)+(III) 505 411 AS SUCH RS.5,05,411 WAS ADDED BACK TO THE TOTAL INC OME OF THE ASSESSEE UNDER THIS HEAD. 12. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE UNDER RULE 8D (2)(II) OF THE RULES CANNOT BE SUSTAINED BECAUSE THE ASSESS EE HAD OWN SURPLUS FUNDS AND THEREFORE NO INTEREST EXPENDITURE CAN BE ATTRIBUTED TO EARNING INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. AS FAR AS DISALLOWA NCE UNDER RULE 8D(2)(III) OF THE RULES (OTHER EXPENSES) IS CONCERNED THE ASSESSEE S UBMITTED THAT NO DIVIDEND INCOME WAS EARNED DURING THE PREVIOUS YEAR AND THEREFORE N O DISALLOWANCE U/S 14A OF THE ACT CAN BE MADE AND IN THIS REGARD PLACED RELIANCE ON T HE DECISION OF ITAT, KOLKATA BENCH IN THE CASE OF REI AGRO LTD. VIDE ITA NO.1331/KOL/2 011. CIT(A) AGREED TO THE SUBMISSION OF THE ASSESSEE WITH REGARD TO DISALLOWA NCE UNDER RULE 8D(2)(II) OF THE RULES AND FOUND THAT THE ASSESSEE HAD OWN FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVES TO THE TUNE OF RS.304.63 CRORES WHEREAS T HE INVESTMENT WHICH ARE LIKELY TO EARN EXEMPT INCOME WERE ONLY TO THE TUNE OF RS.4.5 CRORES . HE THEREFORE DELETED THE DISALLOWANCE UNDER RULE 8D (2)(II) OF THE RULES I.E . INTEREST EXPENDITURE. AS FAR AS DISALLOWANCE OF OTHER EXPENDITURE U/R 8D(2)(III) OF THE RULES IS CONCERNED, THE CIT(A) HELD THAT IF THERE IS NO DIVIDEND INCOME AND NO DIS ALLOWANCE CAN BE MADE UNDER RULE 8D(2)(III) OF THE RULES AS LAID DOWN IN THE CASE OF REI AGRO LTD. (SUPRA). THE CIT(A) DIRECTED THE AO TO VERIFY THE CONTENTION OF THE ASS ESSEE AND RESTRICT THE DISALLOWANCE BY CONSIDERING ONLY THOSE INVESTMENTS WHICH YIELDED TAX FREE DIVIDEND DURING THE PREVIOUS YEAR. THE FOLLOWING ARE THE OBSERVATIONS O F CIT(A) IN THIS REGARD :- 7 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 THE LD AR HAS CONTENDED THAT THE DISALLOWANCE OF R S.2,80,411/- AND RS.2,25,000/- MADE UNDER RULE 8D(2)(II) & (III) AR E NOT JUSTIFIED ON THE FACTS OF THE CASE. I HAVE PERUSED THE IMPUGNED ORDER AND ALS O CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND RELEVANT JUDICIAL DECISIONS. IT WAS ARGUED BEFORE ME THAT THE INVESTMENTS WERE MADE BY THE ASSESSEE OUT OF ITS OW N FUND AND THAT THE BORROWED FUND WAS UTILIZED FOR THE PURPOSES OF THE BUSINESS. I FIND FROM THE BALANCE SHEET FOR THE RELEVANT YEAR THAT THE ASSESSEE HAD INITIAL SHARE CAPITAL & RESERVES OF RS.304.63 CRORES AND CLOSING SHARE CAPITAL & RESERV ES OF RS.418.06 CRORES WHEREAS TAX FREE INVESTMENT WAS RS.4.5 CRORES ONLY. IN THIS FACTUAL BACKGROUND, I FIND MERIT IN THE ARGUMENT THAT THE INVESTMENTS WER E MADE BY THE OWN FUND OF THE ASSESSEE AND THEREFORE NO DISALLOWANCE OUT OF INTER EST EXPENDITURE WAS JUSTIFIED. THE CONTENTION OF THE ASSESSEE IS ALSO SUPPORTED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD 280 ITR 525 (CAL). IN VIEW OF THE ABOVE, THE ADDITION OF RS.2,8 0,411/- MADE UNDER RULE 8D(2)(II) IS DELETED. THE ASSESSEE HAS CONTENDED BE FORE ME THAT THE INVESTMENTS HAVE YIELDED NO DIVIDEND INCOME DURING THE YEAR AND THEREFORE NO DISALLOWANCE COULD LAWFULLY BE MADE UNDER RULE 8D(2)(III) IN VIE W OF THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF REI AGRO LTD (IT A NO.1331/KOL/2011). THE AO MAY VERIFY THE CONTENTIONS OF THE ASSESSEE IN TH IS REGARD. THE. AO SHALL THEN RE-COMPUTE THE DISALLOWANCE UNDER RULE 8D(2)(III) I N VIEW OF THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF REI AGRO LTD (SU PRA) BY CONSIDERING ONLY THOSE INVESTMENTS WHICH YIELDED TAX FREE DIVIDEND I NCOME DURING THE YEAR. GROUND NO.4 IS PARTLY ALLOWED. GROUND NO 2 AND 5 BE ING GENERAL IN NATURE ARE DISMISSED. 13. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS RAISED GROUND NO.2 BEFORE THE TRIBUNAL. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. DR PLACED RELIANCE ON THE ORDER OF AO AND THE LD. COUNSEL FOR THE ASSESSEE APART FROM REITERATING THE SUBMISSIONS MADE BEFORE CIT(A) AND THE ORDER OF CIT(A) ALSO PLACED R ELIANCE ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HDFC LTD 3 66 ITR 505 (BOMBAY) WHEREIN IT WAS LAID DOWN THAT IF THERE IS INTEREST FREE FUNDS AVAILABLE TO AN ASSESSEE SUFFICIENT TO MEET THE INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAS ALSO RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE F ROM THE INTEREST FREE FUNDS. THE LD. COUNSEL RELIED ON THE FINDINGS OF CIT(A) WHERE THE CIT(A) HAS FOUND THAT THE ASSESSEE HAD INTEREST FREE FUNDS SUFFICIENT TO MEET THE INVESTMENTS WHICH ARE LIKELY TO YIELD TAX FREE INCOME. 8 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ARE OF THE VIEW THAT ORDER OF CIT(A) ON THIS ISSUE DOES NOT CALL FOR ANY INTERFER ENCE. AS RIGHTLY HELD BY CIT(A) DISALLOWANCE UNDER RULE 8D(2)(II) (INDIRECT INTERES T EXPENDITURE) CANNOT BE SUSTAINED IN THE LIGHT OF THE UNCONTROVERTED FINDING OF THE C IT(A) THAT ASSESSEE HAD SUFFICIENT INTEREST FREE FUNDS WHICH WERE MORE THAN THE VALUE OF INVESTMENTS WHICH ARE LIKELY TO YIELD TAX FREE INCOME. AS FAR AS DISALLOWANCE UNDER RULE 8D(2)(III) IS CONCERNED IT IS ONLY THE INVESTMENT WHICH YIELD DIVIDEND INCOME THA T SHOULD BE CONSIDERED FOR THE PURPOSE OF APPLYING THE FORMULA AS HELD BY THIS TRI BUNAL IN THE CASE OF REI AGRO LTD. (SUPRA) WHICH HAS SINCE BEEN AFFIRMED BY THE JURISD ICTIONAL CALCUTTA HIGH COURT. IN VIEW OF THE ABOVE WE FIND NO MERITS IN THE GROUND R AISED BY THE REVENUE. ACCORDINGLY WE DISMISS GROUND NO.2 RAISED BY THE REVENUE. 16. IN THE RESULT IT(SS)A.NO.36/KOL/2015 IS DISMI SSED. IT(SS)A.NO.37/KOL/2015 (A.Y.2011-12) 17. GROUND NO.1 AND 2 RAISED BY THE REVENUE READ AS FOLLOWS :- (1) IN THE FACTS AND CIRCUMSTANCES. OF THE CASE, L D CIT(A) IS ERRED IN DELETING THE DISALLOWANCE AS THE OVERLOADING CHARGES IS NOTH ING BUT A PENALTY AS PER PROVISION OF SECTION 73 OF THE INDIAN RAILWAY ACT, 1989. (2) IN THE FACTS AND CIRCUMSTANCES AND LAW POINT O F THE CASE LD. CIT(A) IS ERRED IN DELETING THE ADDITION U/S 14A WITHOUT GOING INT O THE PROVISION OF IT ACT AND IT RULE. 18. THESE GROUNDS ARE IDENTICAL TO GROUND NOS. 1 AND 2 RAISED BY THE REVENUE IN IT(SS)A.NO.36/KOL/2015 FOR A.Y.2011-12. FOR THE REA SONS STATED WHILE DECIDING THOSE GROUNDS WE DISMISS GROUND NOS. 1 AND 2 RAISED BY THE REVENUE. 19. GROUND NO.3 RAISED BY THE REVENUE READS AS FO LLOWS :- (3) IN THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) IS ERRED IN TREATING THE NPV AS REVENUE ITEM WHERE ITS TRUE NATURE IS CAPITA L IN NATURE. 20. THE ASSESSEE AS WE HAVE ALREADY SEEN IS IN TH E BUSINESS OF MINING. IT HAD INCURRED AN EXPENDITURE OF RS.32,16,09,530/- WHICH WAS A PAYMENT OF NET PRESENT VALUE (NPV) TO THE STATE GOVERNMENT FOR THE PURPOSE OF CARRYING OUT MINING OPERATIONS. THE NATURE OF THE NPV IS THAT IT IS A C HARGE BY THE STATE GOVERNMENT AS PER 9 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 THE DIRECTIONS OF THE APEX COURT AND AS PER THE GUI DELINES ISSUED BY THE MINISTRY OF ENVIRONMENT & FOREST TO ENABLE THE ASSESSEE TO UTIL IZE FOREST LAND FOR MINING PURPOSES. THE SAID PAYMENT OF NPV WAS FOR THE PURPO SE OF CARRYING OUT AFFORESTATION ACTIVITY IN THE AREA IN WHICH MINING IS CARRIED OUT SO AS TO MAINTAIN THE GREEN LAYER OF THE SOIL. THE EXPENDITURE BY WAY PAYMENT OF NPV WA S A STATUTORY OBLIGATION TOWARDS MAINTAINING THE ENVIRONMENTAL BALANCE AND WAS IS IN THE NATURE OF REVENUE EXPENSES. THE EXPENDITURE WAS INCURRED NOT FOR THE PURPOSES O F OBTAINING ANY ASSET BUT FOR SMOOTH RUNNING OF THE BUSINESS OF MINING AND NO END URING BENEFIT WAS BEING OBTAINED BY THE ASSESSEE. THE NPV WAS ONE-TIME PAYMENT, THE SAME WAS NOT INCURRED TO ACQUIRE ANY ASSET. IF NPV IS NOT PAID THE CONSEQUEN CE WOULD BE THAT THE ASSESSEE WOULD NOT BE PERMITTED TO CARRY OUT MINING ACTIVITY . THE ASSESSEE ALSO RELIED ON THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF ACIT VS RUNGTA SONS (P) LTD IN ITA NO. 933/KOL/2009 WHEREIN IT WAS HELD THAT THE EXPEN DITURE ON ACCOUNT OF NPV WAS INCURRED TO ENABLE THE ASSESSEE TO CARRY ON ITS MIN ING BUSINESS AND THE SAME WAS REVENUE IN NATURE ALLOWABLE AS BUSINESS EXPENDITURE U/S 37(1). 21. THE AO HOWEVER HELD THAT THE EXPENDITURE WAS CAPITAL IN NATURE AND CANNOT BE ALLOWED AS DEDUCTION WHILE COMPUTING INCOME FROM BU SINESS. THE AO ALSO HELD THAT THE DECISION IN ASSESSEES OWN CASE IN A.Y.2006-07 ALLOWING THE CLAIM OF THE ASSESSEE IS NOT BEING ACCEPTED BY THE DEPARTMENT AND AN APPE AL U/S 260A OF THE ACT HAS BEEN PREFERRED BEFORE THE HONBLE HIGH COURT. THE AO ACC ORDINGLY DISALLOWED THE CLAIM OF ASSESSEE FOR DEDUCTION OF PAYMENT TOWARDS NPV. ON A PPEAL BY THE ASSESSEE CIT(A) DELETED THE ADDITION MADE BY AO BY FOLLOWING THE D ECISION OF ITAT IN ASSESSEES OWN CASE AND ALSO THE DECISION RENDERED IN THE FOLL OWING OTHER CASES :- 1.MYSORE MINERALS VS ACIT ITA NO. 679/BANG/2010, 35 0,351/BANG/2011, 680/BANG/2010 & 733/BANG/2010 2 ACIT VS FREEGRADE & CO. LTD, ITA NO. 934/K/2009 3 ACIT VSRUNGTA SONS (P) LTD, ITA NO. 933/K/2009 22. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE H AS PREFERRED GROUND NO.3 BEFORE THE TRIBUNAL. 10 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 23. AT THE TIME OF HEARING IT WAS AGREED BY BOTH THE PARTIES THAT THE ISSUE RAISED IN GROUND NO.3 HAS BEEN DECIDED IN ASSESSEES OWN CASE FOR A.Y.2006-07 AND THIS TRIBUNAL HAD HELD AS FOLLOWS :- 12. THE QUESTION BEFORE US IS AS TO WHETHER THE PA YMENT BEING NPV MADE BY THE ASSESSEE FOR OBTAINING FOREST CLEARANCE FOR MINING ON THE FOREST AREAL LAND UNDER THE FOREST CONSERVATION) ACT, 1980 IS ALLOWABLE AS REVENUE EXPENDITURE OR NOT. IT IS RELEVANT TO STATE THAT HONBLE APEX COURT IN THE CASE OF T.N. GODAVARAM THIRNMALPAD (SUPRA) HAS OBSERVED THAT FORESTS ARE VITAL COMPONENTS TO SUSTAIN LIFE SUPPORT SYSTEM ON THE EARTH. THEREFORE, THERE IS AN ABSOLUTE NEED TO TAKE ALL PRECAUTIONARY MEASURES WHEN FOREST LANDS ARE SOUGHT TO BE DIRECTED FOR NON- FOREST USE. HONE'BLE APEX COURT STATED THAT WHEN FO REST LAND IS USED/ DIVERTED FOR NON-FOREST PURPOSES AND THERE IS CONSEQUENTIAL LOSS OF BENEFITS ACCRUING FROM THE FORESTS, THE USER AGENCY OF SUCH LAND BE REQUIRED T O COMPENSATE FOR THE DIVERSION. HON'BLE APEX COURT OBSERVED THAT THE USE R AGENCY BE REQUIRED TO MAKE PAYMENT OF NET PRESENT VALUE (NPV) OF SUCH DIV ERTED LAND SO AS TO UTILIZE THE AMOUNTS SO RECEIVED FOR GETTING BACK IN LONG RU N THE BENEFITS WHICH ARE LOST BY SUCH DIVERSION. HON'BLE APEX COURT VIDE ITS GUID ELINES FOR DETERMINATION OF NPV DIRECTED THE MINISTRY OF ENVIR ONMENT AND FORESTS TO FORMULATE A SCHEME PROVIDING THAT WHENEVER ANY PERM ISSION IS GRANTED FOR CHANGE OF USE OF FOREST LAND FOR NON-FOREST PURPOSE S, AND ONE OF THE CONDITIONS OF THE PERMISSION SHOULD BE THAT THERE SHOULD BE COMPE NSATORY AFFORESTATION, THEN THE RESPONSIBILITY OF THE SAME SHOULD BE THAT OF US ER AGENCY. HONBLE APEX COURT OBSERVED THAT THE MONEY SO RECEIVED TOWARDS NPV SHO ULD BE USED FOR NATURAL ASSISTED RE-GENERATION, FOREST MANAGEMENT, PROTECTI ON, INFRASTRUCTURE DEVELOPMENT, WILDLIFE PROTECTION AND MANAGEMENT, SU PPLY OF WOOD AND OTHER FOREST PRODUCE SAVING DEVICES AND OTHER ALLIED ACTI VITIES. IN THE CONTEXT, HON'BLE APEX COURT OBSERVED THAT NPV WILL NOT FALL UNDER AR TICLE 110 OR 199 OR 195 OF THE CONSTITUTION. IT WAS OBSERVED THAT SUCH PAYMENT S WERE LEVIED FOR RENDERING SERVICE WHICH THE STATE CONSIDERS BENEFICIAL IN PUB LIC INTEREST. IT IS A FEE WHICH FALLS IN ENTRIES 47 OF LIST-ILL OF 7 TH SCHEDULE OF THE CONSTITUTION. THE FUND SET UP IS A PART OF ECONOMIC AND SOCIAL PLANNING WHICH COMES WITHIN ENTRY 23 OF LIST III AND THE CHARGE WHICH IS LEVIED FOR THAT PURPOSE WOU LD COME UNDER ENTRY 47 OF LIST ILL. IN THAT CONTEXT, IT WAS HELD BY THEIR LOR DSHIPS THAT LEVY OF NPV IS A FEE THAT MEANS EVERY MINING AGENCY USING AND CONVERTING FOREST LAND TO NON-FOREST PURPOSE HAS TO PAY A FEE FOR CONTINUING CARRYING ON OF THE BUSINESS. WE AGREE WITH ID. AR THAT NON-PAYMENT OF THIS NPV COULD LEAD TO CONSEQUENCES, INTER ALIA, TO THE STOPPAGE OF THE BUSINESS. THE HON'BLE APEX C OURT HAS HELD IN THE CASE OF BIKANER GYPSUMS LTD. -VS.- CIT (SUPRA) AT PAGE 49 A S UNDER :- 'WHERE THE ASSESSEE HAS AN EXISTING RIGHT TO CARRY ON A BUSINESS, ANY EXPENDITURE MADE BY IT DURING COURSE OF BUSINESS FOR THE PURPOS E OF REMOVAL OF ANY RESTRICTION OR OBSTRUCTION OR DISABILITY WOULD BE ON REVENUE AC COUNT, PROVIDED THE EXPENDITURE DOES NOT ACQUIRE ANY CAPITAL ASSET. PAY MENTS MADE FOR REMOVAL OF 11 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 RESTRICTION, OBSTRUCTION OR DISABILITY MAY RESULT I N ACQUIRING BENEFITS TO THE BUSINESS BUT THAT BY ITSELF WOULD NOT ACQUIRE ANY C APITAL ASSET'. 13 WE OBSERVE THAT BY MAKING THIS PAYMENT OF NPV, N O TANGIBLE ASSET COME INTO EXISTENCE. FURTHER THE SAID PAYMENT IS A PRE-CONDIT ION TO ENABLE THE ASSESSEE TO CARRY ON ITS MINING ACTIVITIES AND AS SUCH IT IS NO T A VOLUNTARY ONE. THAT PAYMENT WAS MADE ON THE BASIS OF DIRECTION GIVEN BY THE DIV ISIONAL FOREST OFFICER WORKING IN THE MINISTRY OF ENVIRONMENT AND FORESTS, GOVERNMENT OF INDIA. SINCE THE SAID PAYMENT OF NPV BEING A STATUTORY REQUIREME NT AND HAS TO BE PAID BY THE ASSESSEE TO CONTINUE TO CARRY ON ITS MINING ACTIVIT IES, WE ARE OF THE CONSIDERED VIEW THAT THE SAID PAYMENT IS WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSE OF CARRYING ON ITS BUSINESS. HENCE, INCURRING OF SUCH EXPENSES SHOULD BE CONSIDERED AS HAVING DIRECT NEXUS WITH THE BUSINESS ACTIVITIES OF THE ASSESSEE. BY MAKING THIS PAYMENT OF NPV, THE ASSESSEE HAS NOT GOT ANY FRESH RIGHT TO MINING, BUT THE SAID PAYMENT HAS BEEN MADE TO OVERCOME ANY RESTRICTION O R OBSTRUCTION OR DISABILITY THAT HAS ARISEN IN CONTINUING OF MINING BUSINESS. W E ARE OF THE CONSIDERED VIEW THAT SINCE IT IS A ONE-TIME PAYMENT, IT COULD NOT B E CONSIDERED AS CAPITAL IN NATURE. HON'BLE APEX COURT HAS HELD IN EMPIRE JUTE COMPANY LTD. -VS.- CIT [124 ITR 1] THAT THERE MAY BE CASES WHERE EXPENDITURE, E VEN IF INCURRED FOR OBTAINING AN ADVANTAGE OF ANY ENDURING BENEFIT, MAY, NONETHEL ESS, BE ON REVENUE ACCOUNT AND THE TEST OF ENDURING BENEFIT MAY BREAK DOWN. HO N'BLE APEX COURT OBSERVED THAT IF THE ADVANTAGE CONSISTED OF MERELY IN FACILI TATING THE CONCERNED ASSESSEE'S TRADING OPERATIONS OR ENABLING THE MANAGEMENT AND C ONDUCT OF THE ASSESSEE'S BUSINESS TO BE CARRIED ON MORE EFFICIENTLY OR MORE PROFITABLY WHILE LEAVING THE FIXED CAPITAL UNTOUCHED, EXPENDITURE WOULD BE ON RE VENUE ACCOUNT, EVEN THOUGH THE ADVANTAGE MAY BE ENDURED FOR AN INDEFINITE FUTU RE. 14. WE OBSERVE THAT IN THE CASE BEFORE US, ASSESSEE HAS GOT RIGHT TO CARRY ON MINING OPERATIONS IN 1982 AND 1985, I.E. LONG TIME AGO BEFORE THE ASSESSEE WAS ASKED TO PAY NPV AS PER DIRECTION OF HON'BLE HIGH C OURT AND CONSEQUENTLY ASSESSEE WAS COMPELLED TO MAKE THE PAYMENT TO FACIL ITATE TO CONTINUE ITS MINING BUSINESS. THEREFORE, THE ABOVE DECISION OF HON'BLE APEX COURT IN THE CASE OF BIKANER GYPSUMS LIMITED (SUPRA) SQUARELY APPLIES TO THE CASE OF ASSESSEE AND IT COULD NOT BE CAPITAL IN NATURE. 14.1. A SIMILAR ISSUE ALSO CAME BEFORE HON'BLE KARN ATAKA BENCH OF ITAT IN THE CASE OF NATIONAL ALUMINIUM CO. LTD. -VS.- DCIT [101 TTJ (CTK) 948]. IN THE SAID CASE, ASSESSEE- COMPANY DEBITED AN AMOUNT OF R S.6.20 CRORES TOWARDS CONTRIBUTION TO MINERALS EXPLORATION FUND SET UP BY GOVERNMENT OF INDIA. THE SAID PAYMENT WAS REQUIRED ON THE DIRECTION OF STATE POLLUTION CONTROL BOARD AND MINISTRY OF ENVIRONMENT AND FORESTS AS A CONDITION TO RENEW ASSESSEE'S CLEARANCE CERTIFICATE. THE FUND WAS SET UP FOR PERI PHERAL DEVELOPMENT WORKS. IT WAS HELD THAT THE SAID PAYMENT IS NOT A VOLUNTARY O NE AND IT IS A PAYMENT ON THE BASIS OF THE DIRECTION GIVEN BY THE GOVERNMENT OF I NDIA, MINISTRY OF MINES, UNDER WHICH THE ASSESSEE- COMPANY COMES. WHEN A PAYMENT I S MADE AS PER SPECIFIC 12 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 DIRECTION OF GOVERNMENT OF INDIA, IT CANNOT BUT BE IN THE BUSINESS INTEREST OF THE ASSESSEE-COMPANY TO ABIDE BY SUCH DIRECTIONS OF THE GOVERNMENT OF INDIA. ACCORDINGLY, THIS PAYMENT IS A STATUTORY REQUIREMEN T AND THE EXPENDITURE HAS BEEN CONSIDERED WHOLLY AND EXCLUSIVELY FOR THE PURP OSE OF BUSINESS AND HAS GOT A DIRECT CONNECTION WITH THE BUSINESS ACTIVITY OF THE COMPANY. IT WAS HELD THAT SINCE THE ASSESSEE- COMPANY WAS FOLLOWING MERCANTIL E SYSTEM OF ACCOUNTING AND THE PROVISIONS HAD BEEN MADE ON THE BASIS OF OFFICE ORDER, THE SAME WAS RIGHTLY ACCOUNTED FOR IN THE CONCERNED YEAR OF ACCRUING OF THE LIABILITY AND IT WAS HELD THAT THE SAME WAS ALLOWABLE AS BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE ACT. SPECIAL BENCH, ITAT, KOLKATA IN PEERLESS SECUR ITIES LIMITED -VS.- JOINT COMMISSIONER OF INCOME TAX [93 TTJ 325(SB)] HELD TH AT IF THE ADVANTAGE CONSISTS OF MERELY IN FACILITATING THE ASSESSEE'S T RADING OPERATIONS OR ENABLING THE MANAGEMENT AND CONDUCT OF ASSESSEE'S BUSINESS TO BE CARRIED ON MORE EFFICIENTLY OR MORE PROFITABILITY WHILE LEAVING THE FIXED CAPIT AL UNTOUCHED, EXPENDITURE WOULD BE ON REVENUE ACCOUNT, EVEN THOUGH THE ADVANT AGE MAY ENDURE FOR AN INDEFINITE FUTURE. AHMEDABAD BENCH, ITAT IN JOINT C OMMISSIONER OF INCOME TAX -VS.- DEWERSON INDUSTRIES LIMITED [2005 TIOL 236 (A HD.)] HELD THAT PAYMENTS OF SIMILAR NATURE TO MINISTRY OF FOREST AND ENVIRON MENT, GOVERNMENT OF GUJARAT WERE ALLOWABLE AS BUSINESS EXPENDITURE. ITAT, MUMBA I BENCH IN INDUSTRIAL DEVELOPMENT BANK OF INDIA -VS.- DEPUTY COMMISSIONER OF INCOME TAX [91 ITD 34] HELD THAT EXPENDITURE BY ASSESSEE IN ACCORDANCE WITH STATUTORY GUIDELINES IS ALLOWABLE BUSINESS EXPENDITURE. HON'BLE KOLKATA HIG H COURT IN CIT -VS.- RUNGTA MINES PVT. LTD. [205 ITR 335] HELD THAT WHERE A TRA DER, IN HIS CAPACITY AS A TRADER, BY COMPULSION OF STATUTORY OBLIGATION, HAS TO INCUR AN EXPENDITURE AS A COMPELLING REQUISITE FOR CARRYING ON HIS TRADE, THE EXPENDITURE RESULTING IN A CAPITAL ASSET IN THE HANDS OF A THIRD PARTY, IS TO BE TAKEN AS REVENUE EXPENDITURE BECAUSE NO ASSET ARISES TO THE TRADER B REASON OF S UCH EXPENDITURE. IT WAS FURTHER HELD THAT WHERE LAW IMPOSES ON THE ASSESSEE, AN OBL IGATION TO INCUR EXPENSES FOR BEING PERMITTED TO PURSUE ITS TRADING ACTIVITY, THE EXPENDITURE WOULD BE AN OUTGOING FROM THE PROFITS OF THE TRADE. 15. IN VIEW OF THE ABOVE DECISION AND THE FACTS OF THE CASE BEFORE US, WE HOLD THAT ID. CIT(APPEALS) HAS RIGHTLY HELD THAT THE ABOVE EX PENDITURE OF RS.3,95,56,500/- PAID BY THE ASSESSEE AS NPV TO ENABLE THE ASSESSEE TO CARRY ON ITS MINING BUSINESS IS REVENUE IN NATURE, WHICH IS ALLOWABLE A S BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE ACT. THEREFORE, WE UPHOLD THE ORDER OF ID. CIT(APPEALS) BY REJECTING GROUND NO. 1 OF THE APPEAL TAKEN BY THE D EPARTMENT. HENCE, GROUND NO.1 IS REJECTED. 24. IN VIEW OF THE AFORESAID DECISION IN THE CASE OF ASSESSE BY THIS TRIBUNAL WE FIND NO MERITS IN THE GROUND RAISED BY THE REVENUE. CONSEQU ENTLY THE SAME IS DISMISSED. 25. IN THE RESULT ITA(SS)A.NO.37/KOL/2015 IS DISM ISSED. IT(SS)A.38/KOL/2015 (A.Y.2012-13): 13 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13 26. GROUND NO.1 AND 2 RAISED BY THE REVENUE READ AS FOLLOWS :- (1) IN THE FACTS AND CIRCUMSTANCES. OF THE CASE, L D CIT(A) IS ERRED IN DELETING THE DISALLOWANCE AS THE OVERLOADING CHARGES IS NOTH ING BUT A PENALTY AS PER PROVISION OF SECTION 73 OF THE INDIAN RAILWAY ACT, 1989. (2) IN THE FACTS AND CIRCUMSTANCES AND LAW POINT O F THE CASE LD. CIT(A) IS ERRED IN DELETING THE ADDITION U/S 14A WITHOUT GOING INT O THE PROVISION OF IT ACT AND IT RULE. 27. THESE GROUNDS ARE IDENTICAL TO GROUND NOS. 1 AND 2 RAISED BY THE REVENUE IN IT(SS)A.NO.36/KOL/2015 FOR A.Y.2011-12. FOR THE REA SONS STATED WHILE DECIDING THOSE GROUNDS WE DISMISS GROUND NOS. 1 AND 2 RAISED BY THE REVENUE. 28. IN THE RESULT IT(SS)A.NO.38/KOL/2015 IS DISMI SSED. 29. IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 05.04.2017. SD/- SD/- [M.BALAGANESH] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 05.04.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. FEEGRADE & COMPANY PVT. LTD., 8A, EXPRESS TO WER, 42A, SHAKESPEARE SARANI, KOLKATA-700017. 2.D.C.I.T., CENTRAL CIRCLE-1(3), KOLKATA. 3. C.I.T.(A)-20, KOLKATA 4. C.I.T., CENTRAL- I, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES 14 IT(SS)A.NOS.36 TO 38/KOL/2015-M/S. FEEGRADE & CO.P VT.LTD. A.Y.20111 TO 2012-13