DCIT, MOHALI vs. M/S INFOTEL SATCOM PVT. LTD., MOHALI

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 disallowance made by the Assessing officer on account of interest

paid on delayed payment.

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.

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.”

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:

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