Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessee-company carried on business of arrack bottling, manufacture of industrial alcohol and their marketing under licence obtained from State Government - Commissioner of Excise issued a circular stating that arrack should be matured in wooden vats for a minimum period of 15 days before bottling same and in case bottling unit for any reason beyond its control was not able to mature arrack in said manner, unmatured arrack might be bottled with prior permission of officer-in-charge of bottling unit with a penalty of 29 paise per bulk litre - As assessee failed to comply with circular, it after obtaining permission of appropriate authority, paid certain additional amount and claimed deduction of same - Assessing Officer held that as amount was in nature of penalty, assessee was not entitled to any deduction - Whether since time-limit was not fixed under statute, but same was fixed by Commissioner only, question of imposing any penalty for non-compliance of statutory provision did not arise - Held, yes - Whether, therefore, order of Assessing Officer could not be sustained - Held, yes FACTS The assessee-company carried on business of arrack bottling, manufacture of industrial alcohol and their marketing. It obtained a license from the State Government for aforesaid purpose in terms of provisions of the Karnataka Excise Act, 1965. The Commissioner of Excise issued a circular stating that arrack should be matured in wooden vats for a minimum period of 15 days before bottling same. This circular also provided that in case bottling unit for any reason beyond its control was not able to mature the arrack in the said manner, the unmatured arrack might be bottled with prior permission of the officer-in-charge of the bottling unit with a penalty of 29 paise per bulk litre. As the assessee was not in position to comply with first part of the said circular, it after obtaining permission of appropriate authority, paid additional amount. The assessee, in its return, claimed deduction of said amount from its gross income. The assessing authority disallowed the deduction on the ground that…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492