TMI Blog1983 (8) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ends at Samrala for the accounting period relevant to the asst. yr. 1979-80. It had to pay an annual licence fee of Rs. 58,62,000, for this monthwise within the stipulated period on or before the dates fixed by the Excise Department. Under s. 36 (b) of the Punjab Excise Act, 1914, the authority granting any licence, permit or pass under this act, was vested with the powers of cancelling or suspending the licence, permit or pass issued if any duty or fee payable by the holder thereof be not duly paid. The assessee failed to pay some of the monthwise payments due and thereby incurred the applicability of s. 36(b) of the Act. However, in order to continue the business and avoid revocation or cancellation or suspension of the licence granted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. vs. The Excise and Taxation Commissioner 1969 Current Law Journal 290 (P H). He emphasised that the quantum of such penalty is linked with the approximate quantum of loss which the licensee may suffer in case the order cancelling the licence for the remaining period thereof is not revoked. It was thus contended that the critertion for levying so called penalty u/s 80(2) of this Act is the likely loss to be suffered by the assessee and it is not a damage paid by the assessee. 5. Referring to the judgment of the Punjab and Haryana High Court in the case of Cineramas vs. CIT 1977 CTR (P H) 145 relied on by the ld. CIT (A), he contended that in that case there was dispute on penalty paid by the assessee and as such the ratio of that cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Haryana High Court at Simla in the case of CIT vs. Himalaya Rasin Turpentine Mfg. Co. (1953) 24 ITR 132 (Punj). The ld. departmental representative contended that the judgment of the Supreme Court in the case of Delhi Safe Deposits Co. Ltd. does not deal with the infraction of law and is hence not applicable to the facts of the case of the assessee. It was, therefore, contended that the assessee has not made out any case for an interference in the order of the CIT (A). The appeal may be dismissed. 7. However, in the rejoinder the ld. counsel for the assessee made a distinction between infraction of law liable to punishment and infringement of rules incidential to the carrying on of the business of the assessee and the payment thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infraction of s. 36(b) of this Excise Act is concerned is for non-payment of duty or fee only. This payment of duty or fee is to enable an assessee to continue to have a licence without which the business cannot be carried on. In other words, licence is the basis or infrastructure or apparatus for the assessee to carry on the business. But this penalty does not connote punishment by way of pure infringement of any law unconnected and unincidental to the carrying on of the business of the assessee. The Hon'ble Punjab and Haryana High Court in the case of Dwarka Dass Co. referred to supra has very clearly held that the penalty that can be imposed u/s 36(c) r/w s. 80(2) is not in the nature of punishment. With the observations when we refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowing the claim of the assessee. The Hon'ble Punjab and Haryana High Court in the case of Cineramas has stated that penalties and damages paid in connection with infractions and breaches of law cannot be expenditure laid out or expended wholly and exclusively for the assessee's business. However, the court has in this very judgment held that all that is necessary is that the expenditure must be in some way connected with the trade and it must be an ordinary or contemplable incident of trade so as to bring it within the ambit of expenditure wholly and exclusively laid out for the purpose of the business considerations paid for the sole object of maintaining its business and profit earning apparatus. The Hon'ble Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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