DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(1), KOLKATA, KOLKATA vs. WELKIN TELECOM INFRA PRIVATE LIMITED, KOLKATA

Assessment Year: 2013-14 DCIT, Circle- 11(1), Kolkata ………. Appellant Vs. Welkin Telecom Infra Pvt. Ltd. ………… Respondent 76/1, Golaghata Road, Golaghata, Kolkata-700048. (PAN: AAJCS6622G) Appearances by: Shri Subhendu Datta, CIT, Sr. DR appeared for Appellant Shri S. K. Tulsiyan, Advocate & Ms. Puja Somani, CA appeared for Respondent. Date of concluding the hearing : 10.09.2024 Date of pronouncing the order : 10.10.2024 ORDER

Per Dr. Manish Borad, Accountant Member:

raised by the revenue read as under: “1) That the CIT(A) erred in not giving any cognizance to the fact that in this case, Special Audit by independent auditor as per provisions of section 142(2A) of the I. T. Act, 1961. 2) That on the facts and circumstances of the case, the CIT(A) erred in not giving any cognizance to the fact that the assessee failed to explain the negative cash balance in the regular cash book of the assessee before the Welkin telecom Infra Pvt. Ltd. AY : 2013

14. Assessing Officer as well as the Special Auditors appointed u/s. 142(2A) of the Act. 3) That the CIT(A) erred in deleting the addition of Rs. 1,22,38,787/-made under the head unexplained negative cash balance. 4) That on the facts and circumstances of the case, the CIT(A) erred in not giving any cognizance to the fact that the assessee failed to ex lain the genuineness of the disputed expenses under the head Caretaker Expenses of Rs. 1,48,13,420/- allegedly for protection of telecom towers and cash expenses of Rs. 82,38,1271- towards maintenance and services thereof before the Assessing Officer as well as the Special Auditors. 5) That on the facts a d circumstances of the case, the CIT(A) erred in deleting the expenses under the head Caretaker Expenses of Rs.1,48,13,420/- allegedly for protection of telecom towers and cash expenses of Rs. 82,38,127/- towards maintenance and services.

6. That on the facts and circumstances of the case, the CIT(A) erred in deleting the addition of Rs.1,06,12,994/- under the head Site Expenses incurred in cash ignoring the fact that the assessee failed to satisfactorily explain the expenses before the Assessing Officer as well as the independent Auditors with corroborative supporting documents. 7) That on the facts and circumstances of the case, the CIT(A) erred in dleting the addition of RS.23,53,742/- made u/s. 40A(3) accepting the assessee's submission without any cogent reason ignoring the fact that the assessee failed to· satisfactorily explain the expenses before the Assessing Officer as well as the independent Auditors with corroborative supporting documents. 8) That on the facts and circumstances of the case, the CIT(A) erred in deleting the addition of Rs.16,88,075/- ignoring the fact that interest payment for delayed payment of direct taxes is not an allowable expense as per settled position of law. 9) That on the facts and circumstances of the case, the CIT(A) erred in deleting the addition of Rs.2,24,269/- treating the expenditure as Capital Expenditure without proper appreciation of the enduring nature of benefit derived against such expenses. 10) That on the facts and circumstances of the case, the CIT(A) erred in deleting the addition on account of alleged loss on "Fuel-Vodafone" account to the tune of Rs.27,18,476/- ignoring the fact that the assessee has failed to substantiate the claim before the Special Auditor as well as the Assessing Officer.

11. That on the facts and circumstances of the case, the CIT(A) erred in deleting the addition on account of Night Patrolling Expenses of Rs.34.63.042/-. The CIT(A) has deleted the addition ignoring the fact that no tenable documentary evidence as well as the discrepancies noted in the assessment order. 12) That on the facts of the case. the CIT(A) erred in deleting the addition of Rs. 10,66,742/- being employees' contribution to PF and ESI u/s. 36(1)(va) of the Act Page 2 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 ignoring the decision of the Hon'ble Apex Court in the case of CHECKMATE SERVICES P. LTD. -VS- COMMISSIONER OF INCOME TAX in CIVIL APPEAL NO. 2833 OF 2016 dated 12/10/2022. 13) That on the facts of the case, the CIT(A) erred in deleting the addition of rent amounting to Rs.5.27.500/- u/s. 40(a)(ia) of the Act ignoring the fact that the genuineness of the parties remained unestablished as the postal authorities could not trace out such parties at the given address to serve the notices issued u/s. 133(6) of the Act. 14) That on the facts and circumstances of the case, the CIT(A) erred in deleting the addition on account of maintenance charges (of Diesel Generator) of Rs. 80,749/-, The CIT(A) has deleted the addition ignoring the fact the case and findings of the AO. 15) That the appellant craves leave to add any new ground or alter any of the grounds of appeal

and to place arguments during the course of hearing of the appellate proceedings.”

3. Brief facts of the case are that the assessee is a private Limited company, engaged in the business of providing support services to telecom operators in the field of operation and maintenance/surveillance management services for towers and tower sites, providing telecom equipment implementation and roll out projects services to telecom original equipment manufacturers. The assessee e- filed its return of income for AY 2013-14 on 29.09.2013 declaring income of Rs.4,98,34,160/-. Case selected for scrutiny through CASS followed by validly serving notices u/s. 143(2) and 142(1) of the Act. Considering the complex nature of account, a proposal was sent to Pr. CIT-4, Kolkata for carrying out special audit u/s. 142(2A) of the Act. The same was accepted and approval granted nominating Special Auditor Shri Rajib Mahajan (R. Mahajan & Co., Kolkata). The copy of special audit report was given to the assessee for necessary explanation to reply and the same was duly complied barring little time given to do the needful. Director was also issued summon u/s. 131 of the Act and the statements were recorded. According to Ld. AO, Director of assessee company failed to furnish plausible explanation with the queries raised. After giving show cause notice to the assessee and getting reply to the same Ld. Page 3 of 23

Page 4 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 4. Aggrieved, assessee preferred appeal before the Ld. CIT(A) challenging various additions made by AO and also furnished certain additional evidence in order to explain that the alleged additions were uncalled for. Remand report was called by the Ld. CIT(A) and the same was received from Ld. AO vide letter dated 02.07.2018. During the course of assessment proceeding, the assessee made necessary submission and considering the same the remand report was finalised and was sent to the Ld. CIT(A). Thereafter, Ld. CIT(A) considering the documents submitted by the assessee along with the written submission and the observation of the AO in the remand proceedings and further taking note of the facts of the case, decided in favour of the assessee deleting the impugned addition and the finding of the Ld. CIT(A) is at page 80 to 90 of the impugned order at para 6. Aggrieved, revenue is now in appeal before this Tribunal.

Page 8 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 6.27 The appellant paid brokerage of Rs.25,70,639/- @ 5% to M/s Rawalwasia Industries Pvt Ltd. The Learned Assessing Officer contested that the said party is related party u/s 40A(2)(b) and the payment made is excessive. Thus, he disallowed the entire amount paid to Rawalwasis. 6.28 In the submission the appellant has demonstrated that Rawalwasia is holding only 12.5% share and as per requirement of section 40A(2)(b) the beneficial ownership shall be established only if the shareholding exceeds 20%. Therefore, it is very clear that M/s Rawalwasia is not a related party and therefore provision of section 40A(2)(b) are not applicable only. 6.29 Therefore, the addition made by the learned AO for sum of RS.25,70,639/- is not correct and is deleted. 6.30 Accordingly, the ground 9 of the appellant are allowed. Ground 10 6.31 Ground 10 relates to disallowances of interest paid on delayed payments of statutory dues. The learned Assessing Officer has contended that interest paid is penal in nature and should be disallowed. 6.32 The following judicial proceedings can be referred to in light of the subject matter A. The Apex court in the case of Lachandas Mathura Vs. CIT reported in 254 ITR 799 held that,"The High Court has proceeded on the basis that the interest on arrears of sales tax is penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its Full Bench decision in Saraya Sugar Mills P. Ltd. v. CIT (1979] 116 1TR 387 (All). Learned counsel appearing for the appellant-assessee states that the said judgment of the Full Bench has been reversed by the larger Bench of the High Court in Triveni Engineering Works Ltd v. C1T [1983] 144 ITR 732 (A11), wherein it has been held that interest on arrears of tax is compensatory in nature and not penal. This question has also been considered by this court in Civil Appeal No. 830 of 1979 titled Saraya Sugar Mills Pvt. Ltd v. C1T, decided on February 29, 1996. In that view of the matter, the appeal is allowed and questions Nos. 1 and 2 are answered in favour of the assessee and against the Revenue. No order as to costs." B. Hon'ble High Court of Jammu & Kashmir in the case of Commissioner of Income Tax, Amritsar vs. MIs New Alpine Forests, Srinagar reported in [2000] 245 1TR 470 (J&K) has observed that Interest', as understood in the commercial world, is the return or compensation for the retention by one person of a sum of money belonging to or owed to another. The essence of interest is that it is a payment that becomes due because the creditor, hcg, ad his money at the due date. 11 may be regarded either as represent*, the profit the rightful owner might have made if he had the use of the money, or conversely, the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation. It is this compensation which is allowable as a deduction under section 37(1) of the Income Tax Act, 1961. C. The issue of delay in the payment of service tax is directly covered by the judgment of Hon'ble Apex Court in the case of Lachmandas Mathura Vs. CIT reported in 254 ITR 799 in favour of assessee. The relevant extract of the judgment is reproduced below :"The High Court has proceeded on the basis that the interest on arrears of sales tax is penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its Full Benches decision in Saraya Sugar Mills (P.) Ltd v. CIT [19791 1)6 ITR 387 (All.) The learned counsel appearing ,for the appellant-assessee states that the said judgment of the Full Bench has been reversed by the larger Bench of the High Court in TriveniEngg. Works Ltd. v. CIT [19831 144 1TR 732 (All.) (FB), wherein it has been held that interest on arrears of tax is compensatory in naiw-e and not penal. This question has also been considered by this Court in Civil Appeal No. 830 of 1979 titled Saraya Sugar Mills (P.) Ltd. v. CIT decided on 29-2-1996. In that view of the matter, the appeal is allowed and question Nos. 1 and 2 are answered in favour of the assessee and against the revenue."

Page 9 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 6.33 In view of the above judgment, there remains no doubt that the interest expense on the delayed payment is allowable deduction. Hence, the disallowances made by the learned AO is deleted. 6.34 Accordingly, ground 10 of the appellant is allowed. Ground 11 6.35 Ground 11 pertains to disallowance of business expenditure on repairs and maintenance by the learned Assessing Officer. 6.36 The repairs and maintenance are incurred on replacement of parts of commercial vehicles like tyres and rim of the wheel etc. 6.37 The learned Assessing Officer has made the contention that wheel rim made of iron provides enduring benefit and hence should be capitalised. 6.38 The appellant has claimed that the tyres and rim are required for the smooth functioning of the vehicles and that they have to be replaced in shorter span of time. 6.39 Hence, it can be seen that such repairs and and maintenance come under the nature of revenue expenditure due to the nature of such assets, which will have to be replaced in a short period of time. 6.40 Reliance can be placed on the following case law DCIT vsBanco Products Pvt Ltd(ITA No.1105/ Ahd/201 0) wherein it was held that, “3 1 have considered the submissions of the ld AR and the facts of the case. In various cases the Supreme Court and other High Courts have held that replacement of parts of a larger machine would not amount to creation of any new asset or incurring of capital expenditure. Where the manufacturing activity is carried on by machines comprising of various parts, and where one or more of the part is replaced, it would not amount to replacement of the whole. This proposition has been reiterated by the Supreme Court in the case of Saravana Spinning Mills, in the context of a part called "auto leveler" firming part of a carding machine, in the following terms,- 'Similarly, in the carding department we have carding machines with autolevelers. If the maoleveler fails, the carding machine becomes nonfunctional. If an autoleveler is to he repaired then that repair would come within the connotation of the word "current repairs" because it is a part of the carding machine. Even if in a given case, replacement of an autoleveler could come within the connotation of the word "current repairs" if the old part is not available in the market. It is a "current repairs" V the old part is not available in the market It is a "current repairs' V the old part is not available in the market. It is a "current repair" because the carding machine remains an asset without any change even after repair or replacement of the autoleveler. To give an example, a compressor is an important part of an Air-Condition Machine. Repair of the compressor will come in the connotation of the word "current repairs" in section 31 fi) of the said Act because the assessee does not replace the Air- Condition Machine. At the highest, he replaces a part of the air-condition machine. So is the case of the picture tube in a television set, when the picture tube is replaced the television set is not replaced, therefore, such repairs alone can come within the connotation of the word "current repairs" in section 31(0 of the said Act as it stood at the material time. They are effected to preserve and maintain the asset, viz, airconditioner or carding machine," 6.41 Hence, I am of the considerate view that the repairs and maintenance were affected to preserve and maintain the asset to their current capacity i.e the tyres and rims of the wheel are required to keep the vehicles running in efficient manner and hence are revenue expenditure to be debited to Profit and Loss account. Hence the addition made by the learned Assessing Officer has been deleted. 6.42 Accordingly, ground 11 raised by the appellant is allowed. Ground 12

Page 10 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 6.43 Ground 12 relates to disallowance of expense on account of loss on fuel Vodafone. The Learned has disallowed such expenses with the contention that the amount was penal in nature and punitive in spirit. 6.44 The appellant has made his submission and has mentioned that the contract with Vodafone Essar space Ltd, the diesel purchased by the assessee was reimbursed by the Vodafone Essar Space Ltd on presentation of Bill. However, when the actual bills were presented for reimbursement, there were discrepancies in the purchased quantity and the consumption quantity which was due to spillage and leakages. As per the terms of the contract with Vodafone, it is seen that the service provider (i.e the appellant) is responsible to undertake preventive action to avoid diesel spillage or leakage. 6.45 The assessee claims to have taken proper preventive measures. However, it was impossible to avoid leakage of diesel and such the cost of the same has to be borne by the appellant which is the penalty paid by the appellant. 6.46 I am of the considerate view that the appellant has produced sufficient explanation regarding the nature of contract and expenditure. It can be seen that such expenses are in the normal course of business and should be allowable under section 37 of the Act as per the claims made by the appellant. Hence, disallowance made by the learned AO is deleted. 6.47 Accordingly, ground 12 of the appellant is allowed. Ground 13 6.48 Ground 13 relate to disallowance of expenses on account of night patrolling charges. 6.49 The assessee has submitted detailed ledger and vouchers for payment of night patrolling expenses. The appellant has claimed that night patrolling were required in the night to control burglary at different sites as most sites were located in the interior parts and even a small part of asset held by the assessee was a valuable asset and that it was very necessary to avoid theft for smooth functioning of the mobile towers. 6.50 The night patrolling expenses were done on four-wheeler vehicles. The payment includes payment made to night watchman, cost of diesel of the vehicles used for night patrolling, cost of the driver and Page 87 of 91 AAJCS6622G- WELKIN TELECOM INFRA PRIVATE LIMITED A.Y. 2013-14 ITBA/NFAC/S/250/2022-23/1050735877(1) other incidental charges. 6.51 I am of the considerate view that the assessee has been able to prove that the transactions were genuine and the limitations on producing all the vouchers due to the amount being meagre. Hence the addition made by the learned Assessing Officer is deleted. 6.52 Accordingly, ground 13 of the appellant is allowed Ground 14,15. 6.53 Grounds 14 pertain to sum payable by the appellant as deducted from employees by way of contribution to PF and ESI. The appellant has paid the same before the due date of filing of Income Tax Return and claimed to be allowable expense. 6.54 The Assessing Officer has contended that the appellant should have paid such sum before due date mentioned under respective statutory act and not the Income Tax Act. The learned Assessing Officer relied on provisions of section 36(i)(va) which is effective from 1 April 2021. 6.55 It can be seen from the provisions of section 43B that the appellant is required to pay the dues before the due date of filing of return for the relevant assessment year. Relevant extract of S.43B has been reproduced here under Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such Page 11 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. 6.56 From above, it is evident that provision of section 43B clearly states that payment can be made till due date of filing of income tax return, which is complied by the appellant and the provisions quoted by learned AO are applicable from 1 April 2021 onwards. 6.57 Further, reliance has also been placed on the following judgements 1. Supreme Court of India in the case of Commr. Of Income Tax, Gauhati vs Vinay Cement Ltd “In the present case we are concerned with the law as it stood prior to the amendment of Section 43- B. In the circumstances the assessee was entitled to claim the benefit in Section 43-B for that period particularly in view of the fact that he has contributed to provident fund before filing of the return.”

1. Hon'ble High Court of Calcutta being the jurisdictional High Court in the matter of Commissioner of income Tax vs. Ws. Vijay Shree following the judgment of the Hon'ble Supreme Court of India in the matter of CIT vs. Alom Extrusion Ltd., has held that- "After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of commissioner of Income Tax vs. Atom Extrusion Ltd„ we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1 April, 1988. Such being the position, the deletion of the amount paid by the Employees' Contribution beyond due date was deductible by invoking the aforesaid amended provisions of section 43(B) of the Act.'' 1. In the matter of Commissioner of Income Tax, Central II vs. M/s. R.E.I. Agro Ltd., reported in 120131 144 1TD (Kol) 141, the Hon'ble High Court of Calcutta has held that- "The Contribution towards provident fund, even if deposited beyond the stipulated period, is allowable by virtue of the amendment " 6.58 In view of the above I am of the considerate view that the contention of learned Assessing Officer that the dues were not paid by the assessee within the time frame for claiming deduction under the Income Tax Act is incorrect. Therefore, the addition made by learned Assessing Officer is deleted. 6.59. Accordingly, Ground 14, 15 of the appellant is allowed.”

by the Revenue:

10. Ground nos. 1 to 3 of the revenue’s appeal relate to deletion of addition for negative cash balance of Rs.1,22,38,392/- made by AO u/s. 69C of the Act. The said addition was made by Ld. AO based on the finding of the Special Auditors wherein it referred to negative cash balance at various point

Page 12 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 of time. We notice that the assessee is used to issue self cheque and on the very same day debited in the cash book and credited the bank. However, on few occasions, the self cheques were encashed on the later date and the Special Auditor while examining the records has considered the cash receipt entry in the book on day when it was withdrawn from the bank. We find that the assessee is used to incur certain expenses on the multiple sites running in or around 3000 in number through self drawn cheque and for the purpose of making book entry considered that the day when the self cheque has been issued it has been encashed and the entries were made in the books. Though the practice is not correct and only when the cash is actually withdrawn then the entries should be made in cash book but the facts indicate that on the very same day when self cheques have been entered in the books, expenses have also been booked in cash. Genuineness of the expenses have not been doubted by the Ld. AO. Therefore, since the assessee has provided explanation for each of the instance of negative cash and the same is on account of timing difference between recording the expenses in books of account and by withdrawal of cash against self drawn cheque, there is actually no negative cash balance. The supporting cash vouchers duly signed by the parties along with the rectified cash book prepared by factoring such time difference stands submitted, based on which Ld. CIT(A) has rightly come to the conclusion that no addition for negative cash balance of Rs.1,28,38,392/- is called for u/s. 69C of the Act. We, therefore, dismiss ground nos. 1 to 3 raised by the revenue.

16. Moreover, according to us, no ad-hoc disallowance can be made without following the due process of law as contemplated u/s. 145 and 144 of the Act. Before making the ad-hoc disallowance of 90% of the site expenses, no defects in the books of accounts were brought on record by the Ld. CIT(A) nor books of accounts were rejected by him. In the present case, the Ld. CIT(A) himself accepted the fact that the assessee is running more than 3000 telecom sites where site expenses are to be incurred. These sites are located at remote areas. He also admitted that the assessee had submitted the document number, document date, voucher amount, cheque date, cheque number and narration, still an ad-hoc disallowance of 90% was made by him without any cogent reasoning. Even though the assessee had filed all the documents to substantiate its claim, the Ld. CIT(A) allowed only 10% of the claim, which cannot be accepted for the simple reason that if the Ld. CIT(A) was of the opinion that the assessee failed to produce material evidence to prove the expenditure then, he was at liberty to pin point the specific item of expenditure which he finds to be non-genuine for cogent reasons. On these facts, the action of the Ld. CIT(A) in disallowing 90% of the expenses is per se held to be arbitrary and whimsical in nature and against the ‘Rule of Law’. The reliance placed by the Ld. AR on the judgment of the Hon'ble Mumbai ITAT in the case of TUV India Pvt. Ltd. Vs DCIT (ITA No. 6628/Muml2017) reported in [2019] 110 taxmann.com 175 (Mumbai) in this regard, is found to be apt, wherein it was held that, "The assessee also submitted break up of these expenses before Ld. CIT(A) during appellate proceedings anti before the AO during remand proceedings which are placed in paper book. The Remand Reports were called for by Ld. CIT(A) from the A0 with respect to additional evidences filed before it keeping in view Rule 46A of the 1962 Rules. No defects in the books of accounts were brought on record by the authorities below nor books of accounts were rejected by the authorities below. If the authorities were not satisfied with aforesaid details, then they ought to have called for further details. In the preceding assessment year i.e. AY 2010-11 and in immediately succeeding assessment year i.e. AY 2012-13, no ad-hoc disallowances of expenses were made by the AO in an assessment framed u/s. 143(3) of the Act. The assessment orders for AY 2010-11 and AY 2012-13 are placed in file. The assessee has discharged its onus by bringing on record complete details of the expenses incurred by it albeit the same was brought on record during the course of appellate proceedings before Ld. C1T(A)/remand proceedings conducted by the AO under directions of Ld. CIT(A). The powers of Ld. CIT(A) are co-terminus with powers of the AO. No enquiries were conducted by the AO/Ld. CIT(A) even during appellate/remand proceedings. The books of accounts were not rejected by authorities below nor any defect is pointed out by the AO/Ld. Page 17 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 CIT(A) in the books of accounts maintained by the assessee. There is no allegation by Revenue that the assessee claimed any bogus expenses or any attempt is made to defraud Revenue. Under these circumstances keeping in view factual matrix of the case, we are of the considered view that aforesaid ad-hoc disallowance of expenses under various heads of expenses to the tune of 10% of the total expenses incurred by the assessee under these heads of expenses is not warranted and we order deletion of the said ad-hoc disallowance of expenses. The assessee succeeds on ground number 5 and 6 raised by it in memo of appeal flied with tribunal. We order accordingly. "

18. As far as the decisions relied upon by the Ld. CIT(A) in his appellate order, we find that they are not applicable to the facts of the instant case. In the cases of PCIT Vs RimjhimIspat Ltd. [2016] 382 ITR 152 (All) & MaltiGupta vs CIT(2019) 415 ITR 168 (P&H HC), Sandeep Marwahvs ACIT (2019) 260 Taxman 231, the assessee were unable to produce any bills or vouchers to substantiate their claim of expenses and therefore ad-hoc Page 18 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 disallowance out of the total expenditure was made. In the present case however, we note that the bills and vouchers were duly produced before the Ld. CIT(A) and the same was also sent to the AO for his remand report. The Ld. CIT(A) also observes that "the assessee has also submitted the document number, document date, voucher amount, cheque date, cheque number and narration" Hence, the judgments cited by the Ld. CIT(A) are found to be factually distinguishable and hence of no relevance.

15. Respectfully following the view taken by the Tribunal in assessee’s own case and also considering the facts and circumstances for the year under appeal, we fail to find any infirmity in the finding of the ld. CIT(A) as the assessee has specifically demonstrated the genuineness of such expenses which have been incurred towards stipend paid to the trainees in the regular course of business. Thus, ground no. 6 raised by the revenue challenging the deletion of disallowance of site expenses of Rs.1,06,12,994/- is dismissed.

Page 19 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 is made is not mentioned in this voucher. Since the entry of Rs.23,53,742/- is part of a journal entry and not a cash payment entry, the Ld. AO erred in making disallowance u/s. 40A(3) of the Act. Finding of Ld. CIT(A) needs no interference, therefore, ground no. 7 raised by the revenue is dismissed.

17. Ground no. 8 is against the deletion of disallowance of interest on late payment of statutory liability of Rs.16,88,075/-. The said addition is towards disallowance of interest paid for delay in payment of statutory liabilities towards service tax, professional tax and TDS. Ld. CIT(A) has deleted the said disallowance taking support of the decision of this Tribunal in assessee’s own case for AY 2014-15 referred (supra). We, however, note that the Tribunal in case of Premier Irrigation Adritec (P) Ltd. Vs. ACIT, dated 20.01.2023 had held that interest on delayed payment of TDS is not an allowable expenditure u/s. 37(1) of the Act. We, therefore, sustain the disallowance to the extent of interest paid on delayed payment of TDS and affirm the finding of Ld. CIT(A) deleting the remaining amount of disallowance for interest paid on delayed payment of service tax and professional tax. Ground no. 8 raised by the revenue is partly allowed.

19. Ground no. 10 of the revenue’s appeal is against the deletion of disallowance u/s. 37 of Rs.27,18,476/- on account of loss on Vodafone fuel. Page 20 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 We observe that in connection to the service agreement with Vodafone Essar Space Ltd., the assessee had to purchase diesel from different petrol pumps for fuelling in the diesel Generator sets located at sites in different locations. As per the agreement, Vodafone Essar Space Ltd. will reimburse only that portion of the diesel expenses which is actually consumed in the DG sets and the loss incurred due to spilling or leakage will have to be borne by the assessee. The assessee claimed that portion of the expenditure which are towards leakage of diesel and also loss on account of evaporation of diesel are allowable expenditure u/s. 37(1) of the Act. But the said expenditure was shown by assessee as penalty imposed by Vodafone Essar Space Ltd. Ld. AO invoked Explanation (1) to sec. 37 of the Act disallowing the expenditure being penal in nature. We, however, fail to find any merit in the finding of the AO because the said expenditure is not a penalty in the nature of any offence under any law. Such expenses were incurred in the normal course of business and are clearly allowable u/s. 37(1) of the Act. We thus, fail to find any infirmity in the order of the Ld. CIT(A), therefore, the ground no. 10 of the appeal of the revenue stands dismissed.

20. Ground no. 11 raised by the revenue is against the disallowance of night patrolling charges of Rs.34,63,042/-. Ld. AO made such disallowance only on the ground that they were based on self debit voucher and that the genuineness of the expenditure is not proved. We note that the assessee has been incurring the night patrolling charges expenses for self vigilance activities to control burglary and thefts. Night watchmen were appointed to carry out the night patrolling work as the sites are located far away from the city and the persons performing these duties are not very educated. The assessee has to prepare the debit vouchers and pay the agreed sum. Considering the nature and magnitude of the business, we fail to find any reason to doubt the genuineness of the expenditure incurred by the assessee. We thus, fail to find any infirmity in the order of the Ld. CIT(A) treating the alleged expenditure as normal business and genuine Page 21 of 23 Welkin telecom Infra Pvt. Ltd. AY : 2013-14 expenditure. Thus, ground no. 11 of the appeal of the revenue stands dismissed.