TMI Blog2004 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... offence under the NDPS Act. In this view, the rigour of the Explanation to section 37 was fully satisfied and hence the question of claiming any deduction for the value of the seized article did not arise nor was the assessee entitled to claim any such deduction who was found indulging in such heinous and illegal business – Held that Tribunal was not justified in allowing the deduction of Rs. 5,50,000 out of the gross total income of the assessee. - - - - - Dated:- 29-11-2004 - Judge(s) : A. M. SAPRE., ASHOK KUMAR TIWARI. JUDGMENT The judgment of the court was delivered by A.M. Sapre J.- This is an appeal filed by the Revenue (Commissioner of Income-tax) under section 260A of the Income-tax Act, 1961 against an order, dated Octob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee the Commissioner of Income-tax (Appeals) upheld the order of the Assessing Officer by his order dated February 1, 1990. The assessee then filed second appeal before the Tribunal. However, the Tribunal by the impugned order allowed the appeal and held that the assessee is entitled to claim the benefit of loss. In other words, the Tribunal was of the view that since the seizure has resulted in loss to an assessee to the extent of its value (Rs. 5,50,000) in his stock-in-trade and hence relying upon the law laid down by the Supreme Court in the case of CIT v. Piara Singh [1980] 124 ITR 40, the Tribunal allowed the deduction of Rs. 5,50,000 out of the gross total income of the assessee. It is against this view of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofession and no deduction or allowance shall be made in respect of such expenditure." The aforesaid Explanation was inserted by the Finance (No. 2) Act, 1998, retrospectively with effect from April 1,1962. In fact, the need to introduce the Explanation arose on account of the decision rendered by the Supreme Court in the case of Piara Singh [1980] 124 ITR 40. A mere reading of the Explanation quoted supra would clearly indicate 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 that no deduction or allowance shall be made in respect of such expenditure. The assessee in this case was engag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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