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Income Tax Appellate Tribunal - Ahmedabad

Aashirwad Clearing Agency, Ahmedabad vs Assessee

         IN THE INCOME TAX APPELLATE TRIBUNAL AT
                       AHMEDABAD
                   AHMEDABAD "B"BENCH

           Before Shri G.D. Agarwal, Vice-President (AZ) and
                    Shri D.K. Tyagi, Judicial Member


                        ITA No.3285/ Ahd/2010
                         [Asstt.Year 2007-08]

M/s. Aashirwad Clearing Agenc y -vs-     Income Tax Officer
101, Sahajanand Com plex, Nr.            W ard-10(2), Ahm edabad
Swastik Char Rasta, Navrangpura
Ahm edabad
P AN No. AAFF A64 40D

     (Appellant)                         (Respondent)

               Revenue by : Shri K. Madhusudan, SR-DR
               Assessee by: Shri S.N.Divetia, AR

                              ORDER

PER D.K. Tyagi, Judicial Member:-

This is assessee's appeal against the order of Commissioner of Income-tax (Appeals)-XVI, Ahmedabad in appeal No. CIT(A)-XVI /Wd.10(2)/ 227/09-10 dated 22-10-2010 for the assessment year 2007-08.

2. The assessee has taken the following grounds:-

"1.1 The order passed u/s. 250 on 22.10.2010 for A.Y. 2007-08 by CIT(A)-XVI, A'bad, upholding the disallowance of over-loading charges of Rs.4,88,700/- made by AO is wholly illegal, unlawful and against the principles of natural justice.

1.2 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the impugned disallowance without considering the evidence produced and explanation offered.

2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming that the over-loading charges of Rs.4,88,700/- paid to T\RTO ITA No.3285/Ahd/2010 A.Y. 2007-08 M/s. Aashirwad Clearing Agency v. ITO Wd-10(2) A'bd Page 2 were covered under Explanation to Section 37(1) of the Act and as such inadmissible.

2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld that the over-loading charges paid to RTO was expenditure incurred for any purpose which was an offence or prohibited by law.

It is, therefore, prayed that the disallowance of over-loading charges of Rs.4,88,700/- upheld by the CIT(A) may kindly be deleted."

3. The brief facts of the case are that during the assessment proceedings Assessing Officer found that assessee has claimed expenditure of Rs.4,88,700/- in the profit and loss account. The assessee explained that this amount was paid to RTO Ahmedabad for overloading charges. The assessee's contention before Assessing Officer was that this payment was for the purpose of business as it related to overloading charges which was paid in the course of business. This explanation of the assessee was not acceptable to AO and he wrote a letter to RTO, Ahmedabad about the nature of payment. The RTO, Ahmedabad replied that it was a penalty recovered for overloading of goods. The AO therefore disallowed the amount saying that amount represents penalty which is not allowable under the IT Act. This action of AO was confirmed by Ld. CIT(Appeals when assessee went in appeal before him. Further aggrieved assessee is now in appeal before us.

4. At the time of hearing Ld. Counsel for the assessee placed reliance on a decision of ITAT Bench in the case of Agrawal Roadlines Pvt. Ltd. v. DCIT (2011) 7 ITR (Trib) 576 (Ahd) and submitted that the issue is covered in favour of assessee and against the Revenue. Ld. SR-DR on the other hand relied on the orders of authorities below.

5. Heard both the parties and perused the case records and find that on identical facts this Tribunal in the case of Agrawal Roadlines Pvt. Ltd. (supra) has held as under:-

M/s. Aashirwad Clearing Agency v. ITO Wd-10(2) A'bd Page 3 "Held, that the decision of the Supreme Court in Parmajit Bhasin's case was applicable from November 9, 2005, i.e. from the assessment year 2006-07. It was not applicable to the assessment year 2005-06. The Government of Gujarat had allowed vehicles to carry excess load and collected only compensatory amount from the assessee which could not be termed as payment towards infringement of law. The laws of the Sate Government allowed the transporters to carry excess load in vehicles in relevant years and hence such payment was not in violation of any law. Payment of charges for excess load carried in vehicles was in the nature of compensation in the business activities of transportation of goods. It was deductible."

Respectfully following the same, the addition made by Assessing Officer and sustained by Ld. CIT(Appeals) of Rs.4,88,700/- for overloading charges is hereby deleted.

6. In the result, assessee's appeal is allowed.

Order pronounced on this day of 8th March, 2011 Sd/- Sd/-

 (G.D.Agarwal)                                               (D.K. Tyagi)
(Vice President)                                          (Judicial Member)

Ahmedabad,
Dated : 08/03/2011

*Dkp
Copy of the Order forwarded to:-

1.   The Assessee.
2.   The Revenue.
3.   The CIT(Appeals)-
4.   The CIT concerns.
5.   The DR, ITAT, Ahmedabad
6.   Guard File.
                                                                              BY ORDER,

                                            /True copy/
                                                                     Deputy/Asstt.Registrar
                                                                        ITAT, Ahmedabad