2014 (8) TMI 424

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f Rs. 45 lacs, paid by the assessee to the Customs authorities on account of redemption fine, was an allowable expenditure?" 2. The respondent-assessee, a partnership firm, was engaged at the relevant time in manufacture of organic chemicals. Under an agreement dated 9th June, 1987 with M/s India Craft, the respondent-assessee purchased 630 metric tonnes Isobutanol by sale on high-sea basis. The said India Craft had procured the consignment of Isobutanol from Netherlands against REP license issued in their favour. The respondent-assessee upon import applied for clearance of goods under REP licence, but the goods were detained. This resulted in litigation between the respondent-assessee and Customs authorities. The goods in question were ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....mbay, [1993] 201 ITR 684. 5. Learned counsel for the Revenue, however, submits that the decision in Usha Micro Process Controls Ltd. (supra) requires reconsideration in view of decisions of other high courts as noticed in Commissioner of Income Tax Vs. Jayaram Metal Industries, [2006] 286 ITR 403 (Kar) and Maddi Venkataraman & Co. (P) Ltd. Vs. Commissioner of Income Tax, [1998] 229 ITR 534 (SC). He submits that language of Explanation to Section 37 is quite clear and once it is held that the expenditure was incurred for any purpose, which was prohibited by law, the same is deemed not to be incurred for the purpose of business or profession. The said Explanation incorporates a deeming fiction, which must be given full effect to. 6. In ....