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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI SANJAY GARG & Ms. ANNAPURNA GUPTA
Per Sanjay Garg, Judicial Member:
These are cross appeals, one by the assessee and other by the
Department preferred against the order dated 14.03.2017 of
Commissioner of Income Tax (Appeals)-2, Gurgaon [hereinafter
referred to as ‘CIT(A)’].
ITA No.851/Chd/2017 & C.O.No. 64/Chd/2017- M/s Infotel Satcpm Pvt Ltd, Mohali 2
The Revenue is aggrieved by the action of CIT(A) in deleting
the disallowance made by the Assessing officer on account of interest
paid on delayed payment.
The brief facts of the case are that the assessee had paid an
amount of Rs. 40,25,538/- to Antrix Corporation Ltd as interest
expenditure for delayed payment. The assessee had been utilizing the
services of Antrix Corporation Ltd, a fully owned company of
Department of Space, Government of India, for procuring space in
the INSAT system. The Assessing officer treated the payment as
being expenditure for non-business purposes.
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 because it emerges from a contract. The payment is in the nature of compensation for the creditor for the reason that the 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 early recovery/payment gets discounts and on the other hand, delayed payments would entail charging of interest. There is nothing unusual about this practice being followed 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 payment of services and the other for payment of interest for delayed payment of charges. Both these transactions are integral part of one transaction of services and the Appellant 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 delayed 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.”
After hearing the Ld. representatives of the parties, 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 interest on delayed
payment was a regular feature of the business practice as it emerged
from the contract. It was not a penalty rather it was internal part of
the transaction of services, hence, the same constituted 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 dismissed.
C.No. 64/Chd/2017:
The assessee has filed the captioned Cross objections which are
delayed by159 days. No reasonable explanation has been given for
the aforesaid delay in filing the cross objection. Further, a perusal of
the cross objection reveals that the assessee has just tried to rebut the
grounds of appeal taken by the Revenue and no separate relief has
been claimed in the cross objections. The said cross objections are,
therefore, not maintainable and the same are accordingly 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