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2013 (7) TMI 851 - HC - Income TaxBusiness expenditure u/s 37(1) - Encashment of bank guarantee - compensation for non performance - whether in the nature of penalty - Held that:- ONGC encashed the bank guarantee, which was furnished by the assessee (performance guarantee) due to the non-fulfillment of the contract by the assessee. It can be said to be compensatory in nature and not penal in nature, the ITAT has rightly held that the assessee would be entitled to the deduction of the same as business expenditure under section 37(1) - Following decision of Prakash Cotton Mills P.Ltd. vs. Commissioner of Income-Tax [1993 (4) TMI 3 - SUPREME Court] - Decided against Revenue.
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