1978 (11) TMI 32

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....anted in the name M/s. Widge and Co. for 152 Wisconsin engines was purchased on November 8, 1969. In connection with this purchase the assessee had to pay on July 11, 1969, a sum of Rs. 61,000 as penalty to the customs authority for import of the petrol engines. According to the ITO, the penalty for an infringement of law was not an admissible expense. The assessee went in appeal before the AAC. Upholding the contention of the assessee-appellant the AAC held that the amount of Rs. 61,000 paid by the assessee as penalty for releasing his goods from the customs authorities should be allowed as a proper deduction in computing the business income of the assessee. The revenue being aggrieved with this order came in appeal before the Tribun....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....any law as he had imported the goods in which he was actually dealing and that the assessee's case fell squarely within the ratio of the decision of the Bombay High Court in CIT v. Pannalal Narottamdas and Co. [1968] 67 ITR 667. Alternatively, it was contended that the assessee could also claim that the amount was a deductible expense under s. 28(1) of the Act. The Tribunal rejected the contention of the assessee and allowed the departmental appeal. The Tribunal relied upon the decision of the Supreme Court in the case of Haji Aziz and Abdul Shakoor Bros. v. CIT [1961] 41 ITR 350. It was held therein that no expense which was paid by way of penalty for a breach of the law, even though it might involve no personal liability could be said ....