Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

M/s. SHYAM SEL LTD Versus DEPUTY COMMISSIONER OF INCOME TAX, CC XIII, KOLKATA

Disallowance u/s 37 - compensating the damage to the environment - Held that:- The payment of the sum of ₹ 12,50,000/- would not be deductible if the same had been made for the purpose of achieving an illegal object or for an illegal purpose. Such payment is opposed to public policy which presumably is the reason why the same is not deductible. - The payment in this case was for the purpose of compensating the damage to the environment and this compensation has been recovered on the “p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Income Tax Act. The payment is undoubtedly for the purpose of business or is in consequence of business carried on by the assessee and is thus covered by section 37. - For the aforesaid reasons, the order passed by the learned Tribunal is set aside. - Decided in favour of assessee. - ITA NO.850 OF 2008 - Dated:- 19-7-2016 - GIRISH CHANDRA GUPTA AND ARINDAM SINHA, JJ. FOR THE APPELLANT : MR.R.K.CHOWDHURY, ADVOCATE FOR THE RESPONDENT : MR.MRINAL KANTI LODH, ADVOCATE The Court : The subjec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as erred in law in disallowing the expenditure of ₹ 12,50,000/- incurred by the petitioner on account of payment of penalty and in not upholding the order of the Commissioner of Income Tax (Appeals)? (b) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal has erred in law in not construing the provision of section 37 of the Income Tax Act, 1961 in passing the impugned order? At the hearing of the appeal after the learned advocates were heard, we were incli .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t & Loss account. The amount of ₹ 12,50,000/- was on account of penalty charges paid to Pollution Control Board for non installation of pollution control equipment at the factory premises. The assessee claimed that this amount was deducted by Pollution Control Authorities on account of failure of the assessee for installation of pollution control equipment. The submission of the assessee is pursued and a sum of ₹ 12,50,000/- on account of penalty charges claimed in the Profit &am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Law Officer of W. B. Pollution Control Board failing which the Board had decided to issue a Closure Order with disconnection of electricity without any further reference. In view of such facts, it is apparent that the payment was not exactly made in way of penalty but in response to the order of the government. The learned tribunal, however, reversed the order of the CIT(A) for the following reasons:- It is very clear that the amount of ₹ 12,50,000/- was levied as penalty by the West Beng .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ause the State Govt. had levied the penalty after considering all the relevant facts and circumstances of the case and what is relevant for us is to decide whether the payment was in the nature of statutory penalty imposed by way of punishment for breach or infraction of the law or compensation in exercise of an option, as held by the Hon ble Supreme Court in the case of Ahmedabad Cotton Mfg. Co. Ltd. (supra). Since in this case neither any option was given to the assessee nor there was any comm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ay of compensation because the assessee had failed to install the requisite devise within the prescribed time, as per the performance guarantee furnished by him, which so far as material for our purpose is as follows:- 1. We, Oriental Bank of Commerce, Princep Street Branch, 2B, Ganesh Chandra Avenue, Kolkata - 700 013 (hereinafter referred to as Guarantor Bank term include it s successor or assignee) with it s Head Office at Harsha Bhawan, E-Block, Connaught Place, New Delhi - 110 001, hereby a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ter called the industry, which term shall include it s successor or assignee). 2. Where as the industry has undertaken to complete the erection of Pollution Control System in all respect upto the satisfaction of the State Board and meeting the statutory norms under existing Environmental Acts and Rules. We, Oriental Bank of Commerce, Princep Street Branch, 2B, Ganesh Chandra Avenue, Kolkata - 700 013 (the guarantor bank), do, hereby undertake to pay to the Board an amount not exceeding ₹ 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

M.C. Mehta Vs. Kamal Nath and Others reported in 2000(6) SCC 213 wherein the subject matter of challenge was a notice issued for imposition of fine for causing pollution. Their Lordships in that case held that :- A fine is to be imposed upon the person who is found guilty of having contravened any of the provisions of the Act. He has to be tried for the specific offence and then on being found guilty, he may be punished either by sentencing him to undergo imprisonment for the period contemplate .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n, therefore, who is guilty of causing pollution has to pay damages (compensation) for restoration of the environment and ecology. He has also to pay damages to those who have suffered loss on account of the act of the offender. The powers of this Court under Article 32 are not restricted and it can award damages in a PIL or a Writ Petition as has been held in a series of decisions. In addition to damages aforesaid, the person guilty or causing pollution can also be held liable to pay exemplary .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

show cause why in addition to damages, exemplary damages be not awarded for having committed the acts set out and detailed in the main judgment. This notice shall be returnable within six weeks. This question shall be heard at the time of quantification of damages under the main judgment. Mr. Chowdhury submitted that the learned Tribunal held that it was a penalty imposed and, therefore, not deductible. He contended that no proceedings were initiated against the assessee. There is no finding th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n to a judgment of the National Green Tribunal in the case of State Pollution Control Board Vs. M/s. Swastik Ispat Pvt. Ltd. and Ors.. He drew our attention to paragraph 33 wherein the practice of insisting upon furnishing a bank guarantee has been discussed, which reads follows :- The procedure normally adopted by the Board is to permit the industrial operations for a definite period upon furnishing of Bank Guarantee for compliance and compensation, if required, and during integrin permitting t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essee was in the nature of compensation and not penalty, Mr. Chowdhury relied upon paragraph 38 of the judgment, which reads as follows:- Being punitive is the essence of penalty . It is in clear contradistinction to remedial and/or compensatory . Penalty essentially has to be for result of a default and imposed by way of punishment. On the contrary, compensatory may be resulting from a default for the advantage already taken by that person and is intended to remedy or compensate the consequence .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

toration and not a penal consequence. In gathering the meaning of the word penalty in reference to a law, the context in which it is used is significant. Mr.Lodh, learned advocate, appearing for the revenue drew our attention to the judgment of the learned Tribunal and reiterated that the payment made by the assessee was in the nature of a penalty and, therefore, should not be deductible under section 37. We have considered the rival submissions advanced by the learned advocates. It would be fru .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure. Under sub-section I of Section 37 it is provided that the revenue expenditure should have been spent wholly and exclusively for the purposes of business or profession in order to be deductible. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

law. For better understanding of the issue, reference may be made to Section 24 of the Contract Act, which provides as follows:- 24. Agreements void, if considerations and objects unlawful in part.- If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void. Illustration A promises to superintend, on behalf of B, a legal manufacture of indigo, and an illegal traffic in other ar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version