Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (11) TMI 345 - ITAT MUMBAIPayment made as redemption fine treated as deemed income u/s 69C - Import of almond – Held that:- In Commissioner of Income-Tax Versus Ahmedabad Cotton Manufacturing Co. Limited [1993 (10) TMI 1 - SUPREME Court ] it has been held that the statutory impost paid as damages, penalty or interest, if compensatory in nature, it is allowable as business expenditure - the nomenclature was not conclusive - It was concluded that payment, though referred as a penalty, but in fact made in exercise of option available under statutory scheme, in course of assessee’s business, is allowable business expenditure - the payment was made to release the goods, therefore, it can be said to be compensatory as the Customs Authorities were recovering the difference between the market price and import cost - payment was in respect of commercial transaction between two unrelated parties - The assessee had applied for clearance of goods in India - Earlier similar goods have cleared by Customs Authorities under REP licence - The fault or defect in the REP licence was not attributable to the assessee - The assessee was not to be blamed who has not indulged in any offence or incurred any expenditure for the purpose which was prohibited by law. The order of the Tribunal was confirmed holding that the amount paid by the assessee to Customs Authorities was in the nature of redemption fine therefore allowable as business expenditure – thus, the amount paid by the assessee to the Customs Authorities in terms of order dated 27-10-1986 was in the nature of redemption fine and not penalty and it was allowable as business expenditure which enhances the cost of goods - the payment was made by sister concern of the assessee namely M/s Mangla Brothers through Account Payee cheque/DD - The assessee has also furnished GIR No. AV-297-M(2) of M/s Mangla Brothers - there is no reason to doubt the source of payment - the assessee also submitted that after a lapse of 20 years, it is not possible for the assessee to produce the books of account for verifying the relevant entry made regarding payment of ₹ 75 lacs - The fact that the assessee is challenging the disallowance of payment made to Customs Authority clearly establishes that the same was recorded in the books of account and therefore claimed as business expenditure – Decided in favour of assessee.
|