2013 (7) TMI 114

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.... by the Revenue for the assessment year 2004-05 the following question of law has been raised for our consideration : "On the facts and in the circumstances of the case and in law whether the Tribunal is justified in deleting the addition made by the Assessing Officer of Rs. 40,10,437 on account of penalty paid by the assessee to the Apparel Export Promotion Council even though the said e....

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....ndent recorded the said payment as penalty in its books of account and claimed deduction under section 37(1) of the Income-tax Act, 1961 ("the Act"). Before the Assessing Officer, the respondent contended that the nomenclature of penalty was erroneous as the payment made to the AEPC was compensatory in nature and, thus, allowable as deduction under section 37(1) of the Act. However, the Assessing ....

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....fact recorded by the Commissioner of Income-tax (Appeals) and upheld by the Tribunal was that respondent took a business decision not to honour its commitment of fulfilling the export entitlement in view of loss being suffered by it. The Assessing Officer does not dispute this fact nor does he doubt the genuineness of the claim of the expenditure being for business purpose. In these facts the Trib....