Customs law violation penalty not deductible for computing business profits. Tribunal decision upheld.

Free Wheels India Limited. Versus Commissioner of Income Tax.

Free Wheels India Limited. Versus Commissioner of Income Tax. - [2001] 252 ITR 877, 119 TAXMANN 745 The High Court of Delhi ruled that the sum of Rs.14,000 paid by the assessee as a fine in lieu of confiscation of goods cannot be considered as part of the actual cost of the goods and is not deductible in the computation of business profits. The Tribunal's decision was upheld, stating that the penalty paid by the assessee for violation of customs laws cannot be regarded as a business expense. The judgment favored the Revenue and went against the assessee.