TaxTMI 
TaxTMI 
1992 (10) TMI 61
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the relevant accounting years ? " The brief facts of the case are that the assessee is a dealer in Tata motor parts. Certain motor parts were purchased by the assessee from within the State of Rajasthan, on which Rajasthan sales tax was paid. While supplying such parts to the Government Departments, the assessee has charged sales tax in addition to the value of the goods. The amount of sales tax so collected was not deposited in the Government Treasury and the entire amount of sales tax was credited in mal khata along with the sale price of the goods. The Sales Tax Department levied penalties of Rs. 50,000 and Rs. 75,075 in respect of the assessment years 1978-79 and 1979-80 under section 16(1)0) of the Rajasthan Sales Tax Act, 1954. The a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he sale of any goods in respect of which no tax is payable by him or tax at a rate higher than that payable under this Act or having charged such tax retains such tax knowing it to be not due or higher, then he is liable for penalty in a sum not exceeding double the amount of unauthorised tax so demanded, charged or retained. The provisions of section 16(1)j) have subsequently been amended which are not relevant for the purpose of determination of this dispute. A distinction has been made by a subsequent amendment between the tax amount and the quantum of penalty to be levied, but in so far as the present case is concerned, the assessee is liable for payment of penalty in respect of the unauthorised tax demanded, charged or retained. The qu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t normal incident of business and, therefore, only such disbursements can be deducted as are really incidential to the business itself. They cannot be deducted if they fall on the assessee in some character other than that of a trader. Therefore, where a penalty is incurred for the contravention of any specific statutory provision, it cannot be said to be a commercial loss falling on the assessee as a trader, the test being that the expenses which are for the purpose of enabling a person to carry on trade for making profits in the business are permitted but not if they are merely connected with the business. The Allahabad High Court in Cawnpore Sugar Works Ltd. v. CIT [1992] 196 ITR 274, has also taken the view that expenditure incurred by....