Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1979-80 - Assessee-company claimed deduction of expenditure on account of penalty levied under M.P. General Sales Tax Act - ITO disallowed assessee's claim - Tribunal, however, allowed assessee's claim on ground that imposition of penalty did not involve any moral culpability or mens rea - Whether since penalty had been imposed on assessee for breach of law, Tribunal was not right in directing deduction of penalty as business expenditure - Held, yes FACTS The assessee company claimed deduction of expenditure on account of penalty levied under the M.P. General Sales Tax Act. The ITO disallowed that claim. On second appeal, the Tribunal held that the amount paid by the assessee on account of penalty was allowable as business expenditure as the imposition of penalty did not involve any moral culpability or mens rea. On reference: HELD In view of decisious in CIT v. Malwa Vanaspati and Chemical Co. Ltd. [1982] 135 ITR 221(MP)and Haji Aziz and Abdul Shakoor Bros. v. CIT [1961] 41 ITR 350 (SC)and having regard to fact that the penalty in the instant case had been imposed on the assessee for breach of the law, the Tribunal was not right in directing the deduction of penalty as business expenditure. Note: The case has been decided in favour of the revenue. CASE REVIEW CIT v. Malwa Vanaspati and Chemical Co. Ltd.[1982] 135 ITR 221 (MP) and Haji Aziz and Abdul Shakoor Bros. v. CIT[1961] 41 ITR 350 (SC)followed and relied upon. CASES REFERRED TO CIT v. Malwa Vanaspati & Chemical Co. Ltd. [1982] 135 ITR 221 (MP) and Haji Aziz and Abdul Shakoor Bros. v. CIT [1961] 41 ITR 350 (SC). B.K. Rawat and R.K. Verma for the Applicant. K.L. Israni for the Respondent. JUDGMENT G.G. Sohani, Actg., C. J.-By this reference under section 256(1) of the Income-tax Act 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in directing the deduction of Rs. 6,700 as business expenditure?" The…

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