Principal Commissioner Of Incometax, Central-1, Kolkata v. M/S. Rungta Mines Ltd

OD-8 ITA/13/2020 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOMETAX, CENTRAL-1, KOLKATA -Versus- M/S. RUNGTA MINES LTD. Appearance:Mr. Tilak Mitra, Adv....for the appellant.Mr. Subash Agarwal, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA -And- Date : 8[th] April, 2022. The Court : This appeal filed by the revenue filed under Section 260A of the Income Tax Act, 1961 (the ‘Act’ inbrevity) is directed against the order dated 5[th] October, 2018passed by the Income Tax Appellate Tribunal, “D” Bench, Kolkata(in short the Tribunal) in ITA No.1531/Kol/2017 for theassessment year 2014-15. The appeal was admitted on 17[th] February, 2020 on following substantial question of law: i)Whether on the facts and in the circumstances ofthe case the penalty paid by the assessee under Indian Railways Act, 1989 for excess loading ofcargo in wagons in an allowable expenditure underSection 37 of the Income Tax Act, 1961 ? We have heard Mr. Tilak Mitra, learned standing counselfor the appellant/revenue and Mr. Subash Agarwal, learnedadvocate appearing for the respondent/assessee. Identical substantial question of law was decided by usagainst the revenue in the case of Principal Commissioner ofIncome Tax, Central-1, Kolkata vs. M/s. Feegrade & Company Pvt.Ltd. in ITAT/25/2018 on 4[th] January, 2022. In the saiddecision, we took note of the judgment of the Hon’ble SupremeCourt in Prakash Cotton Mills Pvt. Ltd. reported in 201 ITR 684,wherein it was held that any payment which is compensatory innature can be allowed under Explanation to Section 37(1) of theAct. Further, in the instant case, the tribunal has also takennote of a decision of the Mumbai Tribunal, in the case ofTaurian Iron & Steel Co. Pvt. Ltd. vs. ACIT, passed in ITANo.847 & 1613/M/2010 wherein it was held punitive charges paidby the assessee to railways for overloading of wagon iscompensatory in nature and the same cannot be disallowed byinvoking the provisions of explanation to Section 37(1) of theAct. In the said decision, the tribunal has taken note of thedecision in Prakash Cotton Mills Pvt. Ltd. Thus, we find that the substantial question of lawframed for consideration has to be answered against the revenue. Accordingly, the appeal (ITA/13/2020) is dismissed and thesubstantial question of law is answered against the revenue. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) As.