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2013 (10) TMI 9 - HC - Income TaxExpenditure u/s 37(1) - whether levy of redemption fine and personal penalty was in the nature of fine and penalty and are not to be allowed as deductible business expenditure – Held that:- In Prakash Cotton Mills Pvt. Ltd.’s case [1993 (4) TMI 3 - SUPREME Court], the Supreme Court pertinently observed that whenever an authority has to decide whether to grant or refuse deduction under section 37(1) of the Income Tax Act, the governing test would be whether the amount payable is compensatory in nature – In the present case, personal penalty on the appellant is deleted – Regarding confiscation of goods, appellant was given the choice of redeeming the goods by depositing redemption fine - Amount of redemption fine of Rs.4,00,000/- in the present case was compensatory and therefore, fell outside the mischief of explanation of Section 37(1) of the Income Tax Act – Decided in favor of Assessee.
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