2015 (2) TMI 352

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....ts. The case of the assessee was selected for scrutiny. During assessment proceedings, the A.O. observed that assessee had debited an amount of Rs. 55,92,254/- on account of interest on custom duty under the head operating and other expenses. The A.O. asked the assessee to provide details of the same but he observed that assessee had not filed any detail. The A.O. held that the payment was in the nature of penalty on Government duties which was not allowed under the provisions of the Act and, therefore, he disallowed the same. Aggrieved, the assessee filed appeal before Ld. CIT(A). Ld. CIT(A) on the basis of various submissions including additional evidence, was not convinced with the arguments of the assessee and upheld the action by obser....

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....was in the nature of interest and not penalty, was placed. Ld. A.R. further invited our attention to the order of Settlement Commission and submitted that the assessee was given immunity from penalty and prosecution and the amount actually related to the interest which necessarily is an allowable expenditure. Reliance in this respect was placed on the following case laws:     i) Mahalaxmi Sugar Mills Co. Vs CIT 123 ITR 429(S.C.)     ii) Balrampur Sugar Co. Ltd. Vs CIT 135 ITR 227 (Cal.)     iii) CIT Vs Vikas Chemicals in I.T.A.No. 11/2002 (Del.)     iv) CIT Vs Enchante Jewellery Ltd. in I.T.A.No. 1006/Del.2011. 5. Ld. D.R. on the other hand heavily relied upon the orders of au....