1997 (5) TMI 5

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....d conceded, that questions Nos. 1 and 3 were covered by the decision of the Full Bench of the said High Court in Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387 and that question No. 4 was covered by the decision in CIT v. Geeta Ram Kali Ram [1980] 121 ITR 708 (All) [FB], decided on August 23, 1979. We have heard Shri Mahajan, learned counsel appearing for the appellant/assessee in support of the appeal, and Shri G. C. Sharma, the learned senior counsel appearing for the Revenue. In so far as questions Nos. 2 and 4 are concerned Shri Mahajan has not been able to show any infirmity in the impugned judgment of the High Court. As regards questions Nos. 1 and 3, Shri Mahajan, placing reliance on the decision of this court in Prakash C....

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....ing authority is required to examine the scheme of the provisions of the relevant statute providing for payment of such impost notwithstanding the nomenclature of the impost as given by the statute, to find out whether it is compensatory or penal in nature. The authority has to allow deduction under section 37(1) of the Act, wherever such examination reveals the concerned impost to be purely compensatory in nature. Wherever such impost is found to be of a composite nature, i.e., partly of compensatory nature and partly of penal nature, the authorities are obligated to bifurcate the two components of the impost and give deduction to that component which is compensatory in nature and refuse to give deduction to that component which is penal i....