TMI Blog1980 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act on account of the confiscation of currency notes employed in the smuggling activity ? The respondent, Piara Singh, was apprehended in September, 1958, by the Indian Police while crossing the Indo-Pakistan border into Pakistan. A sum of Rs. 65,500 in currency notes was recovered from his person. On interrogation he stated that he was taking the currency notes to Pakistan to enable him to purchase gold in that country with a view to smuggling it into India. The Collector of Central Excise and Land Customs ordered the confiscation of the currency notes. The ITO now took proceedings under the Indian I.T. Act, 1922, for assessing the assessee's income and determining his tax liability. He came to the finding that out of Rs. 65,500 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy notes entitles the assessee to, the deduction claimed. The currency notes carried by the across the border constituted the means for acquiring gold in Pakistan, which gold he subsequently sold in India at a profit. The currency notes were necessary for acquiring the gold. The carriage of currency notes across the border was an essential part of the smuggling operation. If the activity of smuggling can be regarded as a business, those who are carrying on that business must be deemed to be aware that a necessary incident involved in the business is detection by the customs authorities and the consequent confiscation of the currency notes. It is an incident as predictable in the course of carrying on the activity as any other feature of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the legitimate expenses of the business. Reliance was placed by the revenue on Haji Aziz and Abdul Shakoor Bros. v. CIT [1961] 41 ITR 350 (SC). In that case, however, the assessee carried on the lawful business of importing dates from abroad and selling them in India. The import of dates by steamer was prohibited. None the less he imported dates from Iraq by steamer, and the consignments were confiscated by the customs authorities. But the dates were released subsequently on payment of fine. The assessee's claim to deduction under s. 10(2)(xv) of the Indian I.T. Act, 1922, was rejected on the ground that the amount was paid by way of penalty for a breach of the law. An infraction of the law was not a normal incident of business car ..... X X X X Extracts X X X X X X X X Extracts X X X X
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