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TMI Blog1979 (8) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 10(2)(xv) of the Indian Income-tax Act, 1922, in computing the business profits ? The assessee is a registered firm with its head office at Halsi Road, Kanpur. It had a rolling mill in the name and style of M/s. Mahavir Rolling Mills. The assessee used to manufacture iron bars, out of billets and plate cutting, etc. During the earlier year, the assessee had certain goods under an import licence. On the goods being inspecyed by the customs authorities it was found that they were different from the goods which were covered by the licence. The goods were detained, and a notice was issued to the assessee to show cause why action against it should not be taken for having committed an offence under s. 167(8) of the Sea Customs Act, and for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al difference between the fine paid by the assessee, and the amount paid by way of demurrage. In order to decide as to whether the demurrage paid should be allowed as a business expenditure it is necessary to consider the nature of the claim. Demurrage as applicable to ships is a payment made in the nature of compensation paid for delay of the ship in loading or unloading the goods beyond a particular period. The only distinction between demurrage and damages is that while demurrage is a liquidated amount, the other is an unliquidated one. But the claim is based on the detention of the ship beyond the period allowed for loading and unloading of the goods : See Lockhart v. Falk [1875] LR 10 Exchequer 132, Dunlop & Sons v. Balfour, Williamson ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fine the was allowed to clear the goods against the existing import licence, and use it for home consumption. The result was that once the fine was paid the import licence would be treated as covering the goods imported, for, without such an adjustment against the existing import licence, the assessee could not have cleared the goods from the custom a authorities. It has been seen that a period of nearly 48 months elapsed from the date when the goods embarked at the port and when the import licence was regularised by payment of fine, and the demurrage is for this period. On the import licence being arised and the being allowed to clear the goods against the existing import licence, commercial expediency dictated and required the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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