TMI Blog1997 (5) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue. In so far as questions Nos. 1, 3 and 4 are concerned, the High Court has mentioned that learned counsel for the assessee had conceded, that questions Nos. 1 and 3 were covered by the decision of the Full Bench of the said High Court in Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387 and that question No. 4 was covered by the decision in CIT v. Geeta Ram Kali Ram [1980] 121 ITR 708 (All) [FB], decided on August 23, 1979. We have heard Shri Mahajan, learned counsel appearing for the appellant/assessee in support of the appeal, and Shri G. C. Sharma, the learned senior counsel appearing for the Revenue. In so far as questions Nos. 2 and 4 are concerned Shri Mahajan has not been able to show any infirmity in the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee by way of damages or penalty or interest, is claimed as an allowable expenditure under section 37(1) of the Act, the assessing authority is required to examine the scheme of the provisions of the relevant statute providing for payment of such impost notwithstanding the nomenclature of the impost as given by the statute, to find out whether it is compensatory or penal in nature. The authority has to allow deduction under section 37(1) of the Act, wherever such examination reveals the concerned impost to be purely compensatory in nature. Wherever such impost is found to be of a composite nature, i.e., partly of compensatory nature and partly of penal nature, the authorities are obligated to bifurcate the two components of the impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty that was imposed was not on account of any delayed payment of Central Sales Tax but was for contravention of the provisions of the Central Sales Tax Act. There is nothing on the record to show that the amount of penalty had a compensatory element in it. In the circumstances, we do not find any infirmity in the answer given by the High Court to question No. 3. The appeal is, therefore, partly allowed to the extent that the matter is remitted to the High Court to consider question No. 1 referred by the Tribunal in accordance with the principles laid down by this court in Prakash Cotton Mills Pvt. Ltd.'s case [1993] 201 ITR 684 and if for the purpose of such consideration the High Court considers it necessary it may ask the Tribunal to su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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