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TMI Blog1981 (9) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... ed occupation of the aforesaid piece of land and, therefore, under sections 7(2) and (3) of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, the assessee was required to pay damages of Rs. 25,821.60 at the rate of Rs. 130.50 per month, with effect from 5-4-1958 to 30-4-1974. The above notice, served on the assessee on10-2-1975 and the date for receiving objections fixed on10-2-1975, was extended to24-5-1975. The assessee filed objections to show cause notice on7-5-1975 pleading that the DDA had no right to institute the present proceedings under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. Without prejudice, it was submitted that the damages being charged were more, and should be reduced. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cess Act, 1956, was not a penalty paid for any infringement of law. It was an allowable deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922 ("the 1922 Act"). The point that he made was that the assessee had infringed the law by unauthorisedly occupying the aforesaid piece of land. Thus, the damages paid should not be allowed as business expenditure. He referred to the judgment in Haji Aziz Abdul Shakoor Bros. v. CIT [1961] 41 ITR 350 (SC) for the submission that the penalty paid for an infraction of the law cannot be allowed as business expenditure. He referred to the judgment in Mask Co. v. CIT [1943] 11 ITR 454 (Mad.), wherein it has been held that the assessee's action in disregarding the undertaking given was palpa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty for an infraction of the law cannot be allowed as a business expenditure is unexceptionable. It is, therefore, unnecessary for us to discuss the cases reported in Mask Co. v. CIT and Senthikumara Nadar Sons v. CIT. The judgment in Mahalakshmi Sugar Mills Co. v. CIT is also unexceptionable. We, however, do not agree with the learned departmental representative that the payment of Rs. 20,000 has been made for infraction of any law. As the facts narrated above would show that the assessee had occupied a piece of land in Loha Mandi, Motia Khan, in the year 1948 and this was used for purposes of business without making any payment for the user thereof to anyone. After the DDA was formed some time in 1958, that authority required the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copy of the profit and loss account maintained by the assessee and it is for the year31-12-1975. We have also seen a copy of the assessment order for the assessment year 1978-79 wherein the accounting year is shown ending on31-12-1977. Thus, it is clear that the assessee follows calendar year as the accounting year. It has, therefore, to be seen whether the liability to pay the sum of Rs. 20,000 arose during the calendar year 1975. It is true that the show cause notice was issued by the DDA on31-12-1974but the assessee was required to pay the sum of Rs. 20,000 without finalising the objections and this payment was made on24-7-1975. When the assessee actually made the payment of Rs. 20,000, it can certainly say that the liability to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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