2013 (6) TMI 274

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....nal") for the assessment year 2000-01. 2. On May 25, 2007, the appeal was admitted for determination of the following substantial question of law:-   "Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was justified in holding that loss of Rs. 8,00,760/- claimed in respect of non- released goods was allowable, without taking note of Explanation to section 37(1) of I.T. Act and the fact that goods confiscated were over invoiced to claim excess export benefit/DEPB and for such offence & unlawful action penalty was imposed on firm as well as its partners under Customs Act?" 3. Briefly stated the facts for adjudication of the present appeal are that the assessee firm filed its return of income for the assessme....

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....he appeal. Hence, the present appeal by the revenue. 4. Learned counsel for the revenue submitted that the amount of Rs. 8,00,760/- which was claimed as expenditure was on account of confiscation of goods as the assessee had mis-declared the same under the Customs Act. According to the learned counsel, in such a situation in view of Explanation to Section 37(1) of the Act, the same was inadmissible expenditure. Further, reliance was also placed upon the judgment of the Apex Court in Maddi Venkataraman & Co. (P) Ltd. v. Commissioner of Income Tax, (1998) 229 ITR 534 (SC) in support of his submission.   5. We have heard learned counsel for the revenue as no one has appeared on behalf of the assessee to contest the appeal despite se....

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.... order of confiscation was upheld by the Custom, Excise and Service Tax Appellate Tribunal, New Delhi vide order dated 10.6.2003. The redemption fine of Rs. 3 lacs imposed on the assessee was, however, finally reduced to Rs. 1 lac . The assessee did not get the goods released. The goods having been confiscated on account of violation of provisions of the Customs Act, the claim of the assessee in reduction of value of closing stock, would fall as an expenditure incurred for the purpose which is an offence or which is prohibited by law. The same would not be admissible in view of the Explanation to Section 37(1) of the Act. 9. Further, the Apex Court in Maddi Venkataraman & Co. (P) Ltd's case (supra), delving into the issue whether the ben....