1996 (2) TMI 52

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....eads as under : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that in computing the net income of the assessee from illegal sale of liquor the assessee was entitled to deduction of Rs. 52,589 alleged to have been paid as bribes to officials, particularly when the same amount of Rs. 52,589 had been claimed as deduction against legal sales and disallowed for want of verification ? " The brief facts giving rise to this reference are thus : The assessee/non-applicant is a firm deriving income from the purchase and sale of country liquor, after obtaining the liquor contracts through the procedure prescribed by the Madhya Pradesh Government. The assessee filed an original income-tax r....

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....red by the Tribunal for answer of this court. We have heard learned counsel for the parties and perused the records. Learned counsel for the parties has invited our attention to various decisions of the Supreme Court as well as that of the High Courts in the cases of CIT v. Coimbatore-Salem Transport (Pvt.) Ltd. [1966] 61 ITR 480 (Mad) ; M. P. State Industries Corporation v. CIT [1968] 69 ITR 824 (MP ); CIT v. Kothari (S. C.) [1971] 82 ITR 794 (SC) ; CIT (Addl.) v. Badrinarayan Shrinarayan Akodiya [1975] 101 ITR 817 (MP) ; CIT (Addl.) v. Kuber Singh Bhagwandas [1979] 118 ITR 379 (MP) [FB] ; CIT v. Piara Singh [1980] 124 ITR 40 (SC) ; CIT v. Kodandarama and Co. [1983] 144 ITR 395 (AP) ; Shri Vishnu Kumar Soni v. CIT [1985] 155 ITR 34 (MP) ;....

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....iness under section 10(1)." In that case also, their Lordships of the Supreme Court found that the certificate granted by the High Court was defective and, therefore, the matter was remitted to the High Court to decide the point whether the profits and losses were incurred in the same business even though that business involved the entering into of contracts, some of which were, under the eye of the law, illegal. Therefore, the ratio is that such illegal transaction has not been countenanced. Similarly, in the case of Rajdev Kirana Stores [1990] 181 ITR 285, their Lordships of this court observed (headnote) : " The amount paid by the assessee on account of penalty under the provisions of the Madhya Pradesh General Sales Tax Act, 1958, fo....