The Commissioner Of Income Tax v. M/S. Bombay Industrial Corporation

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 121 OF 2008 The Commissioner of Income Tax ... Appellant Versus M/s. Bombay Industrial Corporation.. Respondent Mr. A.S.Rao for the Appellant. CORAM: F.I.REBELLO&K.U.CHANDIWAL,JJ.DATED: JULY 02, 2008 CORAM: F.I. K.U.CHANDIWAL,JJ. DATED: JULY 02, 2008 P.C. P.C. P.C. . Revenue has preferred this appeal on the following question : "Whether in the facts and circumstances of the case and in law, the Tribunal was justified in holding that the penalty paid for violation of legal provisions is allowable as deduction?" . The learned C.I.T. (A) relied on the judgment in Prakash Cotton Mills Pvt. Ltd. Vs. CIT 201 ITR 684 of the Supreme Court and considering the language of Section 37(1) held that the Assessing Authority is required to examine the scheme of the provisions of the relevant statute providing for payment of such impost notwithstanding the nomenclature of the impost as given by the statute, to find whether it is compensatory or penal in nature. On the facts therein held that it was compensatory and allowed the appeal preferred by the assessee. . Revenue preferred an appeal before the I.T.A.T. I.T.A.T. considering the Circular No. 772 dated 23.12.1998 issued by C.B.D.T. and noted that only those claims will be disallowed in respect of payments on account of protection money, extortion, hafta, bribes etc. as business expenditure. In other words, the payments made basically in the nature of "immoral payments". As noted earlier, the payments for obtaining N.A. certificate are under the D.C.Regulations and are compensatory. Considering the above, the question as raised does not raise any question of law. This is purely a finding of fact. Consequently, the sae does not raise any question of law. Hence, appeal dismissed. (K.U.CHANDIWAL, J.) (K.U.CHANDIWAL, J.)(F.I.REBELLO, J.) (K.U.CHANDIWAL, J.) (F.I.REBELLO, J.)