TMI Blog2013 (6) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... t be a trade pursuit - Not allowed to be deducted - decided against the assessee. - ITA No. 199 of 2007 - - - Dated:- 14-5-2012 - MR. AJAY KUMAR MITTAL. AND MR. JUSTICE G.S. SANDHAWALIA. JJ. PRESENT: Mr. Rajesh Katoch, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short the Act ) against the order dated 31.8.2006 passed in ITA No. 968/CHANDI/2004 by the Income Tax Appellate Tribunal, Chandigarh Bench B , Chandigarh (hereinafter referred to as the Tribunal ) for the assessment year 2000-01. 2. On May 25, 2007, the appeal was admitted for determination of the following substantial question of law:- Whether on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 37(1) of the Act. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short the CIT(A) ] who vide order dated 10.6.2004 allowed the claim of the assessee by relying upon the findings of the Customs and Excise Tribunal in the case of the assessee which had held that non-release of goods for such a long period served no purpose except to cause loss to the appellant. Against the order of the CIT(A), the revenue approached the Tribunal by way of appeal. The Tribunal vide order dated 31.8.2006 upheld the view of the CIT(A) and dismissed the appeal. Hence, the present appeal by the revenue. 4. Learned counsel for the revenue submitted that the amount of Rs. 8,00,760/- which was claimed as expenditure was on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of law. Admittedly, in the present case, the assessee had incurred an expenditure of Rs. 7,95,760/- on purchase of steel balls and besides this, an estimated expenditure of Rs. 5000/- was claimed to have been incurred for transporting the goods to Bombay Port for the purpose of export. The assessee had over invoiced the FOB value in the shipping documents and had made excess claim of DEPB which was 20% of the FOB. The assessee tried to defraud the Government by misdeclaring the goods to the Customs Department which were confiscated and the order of confiscation was upheld by the Custom, Excise and Service Tax Appellate Tribunal, New Delhi vide order dated 10.6.2003. The redemption fine of Rs. 3 lacs imposed on the assessee was, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the business, it was only to be expected that proceedings will be taken against the assessee for violation of the Act. The expenditure incurred for evading the provisions of the Act and also the penalty levied for such evasion cannot be allowed as deduction. As was laid down by Lord Sterndale in the case of Alexander Von Glehn and Co. Ltd. (1920) 12 T.C. 232 (A), it was not enough that the disbursement was made in the course of trade. It must be for the purpose of the trade. The purpose must be a lawful purpose. Moreover, it will be against public policy to allow the benefit of deduction under one statute, of any expenditure incurred in violation of the provisions of another statute or any penalty imposed under another statute. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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