TMI Blog2006 (10) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... aking the payment and was not by way of penalty for breach of law - where the amount paid is in the nature of compensation, the same will be allowable - 79 of 1989 - - - Dated:- 18-10-2006 - ADARSH KUMAR GOEL and RAJESH BINDAL JJ. Dr. N. L. Sharda for the Commissioner. JUDGMENT 1. The following question of law has been referred for opinion of this court by the Income-tax Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "6. So far as the assessee's cross-objection is concerned, in the assessment order the Income-tax Officer himself had stated that from the scrutiny of record, it was found that the fine was incurred by the assessee for making belated payments of the said excise duty. Now, making belated payments would indirectly benefit the assessee inasmuch as the money would remain available to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Act, 1914, was incidental to trade and was allowable as such. In these circumstances, we are of the opinion that the amount paid can be considered to be legitimate business expense of the assessee, though technically it may be called penalty. We, accordingly, allow the cross-objection and delete the disallowance." 3. We have heard learned counsel for the Revenue. 4. We find that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the nomenclature of the impost as given by the statute, to find whether it is compensatory or penal in nature. The authority has to allow deduction under section 37(1) of the Income-tax 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, that is, partly of compensatory nature and partly of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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