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TMI Blog2004 (9) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Income Tax Department. He erred in not considering the submissions made by the appellant during the course of the appeal hearing." 2. At the time of hearing before us, it is submitted by the ld. counsel that the assessee company has taken over the business of a partnership firm known as M/s. Garden Silk Weaving Factory. The Income-tax Department had launched prosecution proceedings against the partners of the erstwhile partnership firm. These partners are now directors of the assessee company. The assessee company has paid the compounding fees to CBDT to avoid the prosecution of the directors of the assessee company. Therefore, the above expenditure was incurred to protect the reputation of the assessee company. If the direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in the nature of capital expenditure or personal expenses of the assessee), laid or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head Profits and gains of business or profession . [ Explanation. For the removal of doubts, it is hearby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.]" From the perusal of above section, it is clear that the deduction for an expenditure can be allowed under section 37(1). If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the assessee are not at all applicable to the facts of the case under consideration. All the cases have entirely different facts and moreover, all the decisions are prior to insertion of Explanation to section 37(1). In view of above, none of the above decisions would be applicable to the case under consideration before us. 6. The assessees has also filed an application seeking admission of following additional ground : "A sum of Rs. 1,75,59,512 received as sales tax incentive from Government of Gujarat for setting up industry in the notified areas in the form of exemption from liability to payment of sales tax is a capital receipt not chargeable to tax as decided by the Special Bench of the Tribunal in Deputy CIT v. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of National Thermal Power Co. Ltd. ( supra ), the Hon ble Supreme Court directed the Tribunal to admit the additional ground because the relevant facts were available on record. Since in this case, the relevant facts are not available on record, the above decision of Hon ble Apex Court would not applicable. The other decisions relied upon by the ld. counsel are not at all applicable. 9. We have carefully considered the arguments of both the parties and perused the material placed before us. From the perusal of the assessment order, we find that the assessee has filed the return declaring Nil income. The disputes before the Assessing Officer were ( i )The claim of Rs. 4,40,58,130 in respect of Escrow Deposit written o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is permitted to raise the above additional ground, the same cannot be adjudicated upon because it would require afresh investigation of facts. The ld. counsel has relied upon several other decisions to support his contention that the additional ground should be permitted to be raised. However, we find that the facts in all the other cases relied upon by the ld. counsel were altogether different. The case of Biju Patnaik ( supra ) was with regard to applicability of Rule 1BB of Wealth-tax Rules. The Special Bench of ITAT held the rule to be of retrospective effect. However, the above decision of Special Bench has no relevancy with the controversy under consideration before us. Similarly, in the case of Smt. Tapati Pal ( supra ), the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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