Case Law Details
Indian Synthetic Rubber Pvt Ltd Vs ACIT (ITAT Delhi)
ITAT Delhi held that expenses in relation to import of rubber process oil, loss on price fluctuation, freight and retention charges are incurred in the course of carrying on business and hence allowable as deduction u/s 37(1) of the Income Tax Act.
Facts- This appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-22 [hereinafter referred to CIT (Appeals)] New Delhi, dated 19.03.2019 for assessment year 2014-15 in sustaining the disallowance of Rs.1,38,97,606/- on account of freight and exchange variation etc. on import and export of consignment of Rubber Process Oil by treating it as fine and penalty.
Conclusion- We observe that the rubber process oil imported by the assessee was freely importable as on the date of placing the order and also as on the date of the cargo reaching the sea-port in India. We also observe that since the customs authorities were not releasing the rubber process oil imported by the assessee and was further required for testing the samples by Central Research Chemical Laboratory as the samples under test does not match with aromatic oil mentioned in IS 15078:2001 and to avoid contesting the matter further the assessee chose to re-export the rubber process oil without incurring further demurrage charges and to avoid any further litigation the consignment was re-exported and also incurred huge loss on such re-export.
Held that the expenses incurred by the assessee, namely, for import of rubber process oil, loss on price fluctuation, freight and retention charges cannot be said that these expenses were incurred for infraction of law. These expenses were incurred in the course of carrying on business of the assessee and they are allowable as deduction under section 37(1) of the Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
