IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER (Assessment Year-2016-17 & 2017-18)

(Virtual Hearing)

A.C.I.T./D.C.I.T., M/s Bharat Coking Coal Limited, Circle-1, Koyla Bhawan, Koyla Nagar, Vs.

Dhanbad. Dhanbad-826001.

PAN No. AAACB 7934 M Appellant/ Assessee Respondent/ Revenue Department represented by Shri Uday Bhaskar Jokke, CIT-DR.

Assessee represented by Shri M.K. Choudhary, Adv. &

Shri Devesh Poddar, A.R.

Date of hearing 19/03/2025 Date of pronouncement 07/04/2025

O R D E R

PER: BENCH

1. These appeals by the revenue are directed against the two separate orders of the National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) [in short, the ld. CIT(A)] dated 24/02/2023 and 23/03/2023 for the Assessment Year (AY) 2016-17 and 2017-18 respectively. These appeals of the revenue are having common facts and grounds except variation in the amounts of addition deleted by the ld. CIT(A), therefore, with the consent of parties, both these appeals are clubbed and heard together and being decided by this consolidated order. For appreciation of facts, we take ITA No. 103/Ran/2023 for A.Y. 2017-18 as a lead case. In this appeal, the revenue has raised following grounds of appeal:

"(i) Whether on the facts and in the circumstances of the case and in law, Ld.

CIT(A) was correct in holding that the under-loading charges are not penal in nature even though as per provisions of Indian Railway Act, 1989, the under-

loadingchargesarepunitivecharges.

(ii) Inthe facts andcircumstances ofthe case, whether the Ld.CIT(A) was correct inholdingthat the demurrage charges paidtoRailways is not penalinnature anddoesnotfallwithinthepurviewofexplanationtoSection37(1)."

2. The facts of the case, in brief, are that, the assessee i.e. M/s Bharat Coking Coal Limited (BCCL) is an undertaking of Government of India. It is a subsidiary of Coal India Ltd. The assessee company is engaged in coal mining. Its collieries are scattered mainly in Dhanbad district in Jharkhand and in some part of West Bengal. The assessee company filed return of income declaring total income of ₹ 356,77,36,970/- for the A.Y. 2017-18. The assessment was completed under Section 143(3) of the Income Tax Act, 1961 (in short, the Act) on 24/12/2019 determining total income of ₹ 550,97,91,015/- by making following additions:

(a) Under Loading Charges : ₹ 121,08,01,000/-

(b) Demurrage Charges : ₹ 23,77,00,000/-

3. Under-loading charges: The Assessing Officer in his order under Section

143(3) of the Act dated 24/12/2019 for the assessment year under consideration, found that the BCCL, the assessee, has claimed expenses in its Profit & Loss Account under the head "under-loading charges” amounting to ₹121,08,1,000/-. Accordingly, notice under Section 142(1) of the Act was issued to the assessee to justify these expenses. In response to that the assessee mentioned that 'under-loading charges' has not been paid to the railway authorities by the BCCL but was actually paid by the coal buyers, who engage the railway wagon for the transportation of coal. As per the terms of Fuel Supply Agreement (FSA) between the BCCL and the coal buyers this under-loading charges are being adjusted in the sales bill raised by the BCCL.

Thus, such charge is not punitive in nature because, it is not paid due to failure in compliance of any statutory law. Rather, it is paid under the commercial agreement i.e. FSA between the BCCL and the coal buyer. It was further explained by the assessee that the railway charges this freight on the transportation of coal as per permissible carrying capacity of its wagons. Full freight as per the permissible carrying capacity (+/ - tolerance, if any) is charged by Railway, even if, less quantum of coal, in comparison to mentioned permissible carrying capacity of the wagon, is loaded in the wagon. Therefore, the freight related to under loading of coal represents the 'Un