1998 (12) TMI 86

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..... SARAF J.--By this reference under section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following question of law to this court for opinion at the instance of the Revenue : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law that penalty levied under section 36(3) of the Sales Tax Act will not be for infraction of law .....

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..... r duly considering the decision of the Supreme Court in Prakash Cotton Mills P. Ltd. v. CIT [1993] 201 ITR 684, wherein it was observed that whenever any statutory impost paid by an assessee by way of damages or penalty or interest is claimed as an allowable expenditure under section 3 7(1) of the Income-tax Act, 1961, the assessing authority is required to examine the scheme of the provisions of .....

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..... of interest. The Tribunal is bound by these decisions and as far as this jurisdiction is concerned. In view of this position it is futile for us to remit the question to the Tribunal in order to decide whether the penalty which is levied for delayed payment of sales tax is compensatory in nature either in part or in full as would entitle it for a deduction under section 37(1) of the Income-tax Act .....

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