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TMI Blog2014 (1) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... - there can be no reason for allowing deduction towards such an expenditure which has been incurred for the purpose of an offence prohibited by law, covered within the meaning of the Explanation to section 37(1) of the Act - Mandate of the Explanation is crystal clear that, 'any expenditure' incurred for any purpose which is an offence or which is prohibited by law cannot be allowed as deduction - It does not make any difference, whether expenditure is direct or indirect - So long as there exists a nexus of the expenditure with the offence, it will continue to be hit by the Explanation – Decided against Assessee. Disallowance on account of discrepancy in ledger’s Account – Held that:- The AO made disallowance towards the interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he professional Director and the Managing Director of the assessee company on bail. The assessee contended that the very fact that the bail was granted fairly indicated that no offence was committed by it. Not convinced, the AO made the addition, which came to be upheld in the first appeal. 4. We have heard the rival submissions and perused the relevant material on record. The assessee is engaged in the business of imports of Timber and Heavy Metal Scrap since 2003-04. It placed an order for supply of approximately 1000 CBM of teakwood with certain party from South America. On 17.05.2006, a specific information was received by Narcotics Control Bureau (NCB) that a 40 ft. Container of Maersk Line bearing a specific number was suspected to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On a specific query, it was stated that no final order on their conviction or acquittal was passed so far. It shows that the charge is still continuing, which is otherwise an offence under the NDPS Act. Under such circumstances, we are of the considered opinion that there can be no reason for allowing deduction towards such an expenditure which has been incurred for the purpose of an offence prohibited by law, squarely covered within the meaning of the Explanation to section 37(1) of the Act. The second ground of the assessee about there being no nexus between the professional fees paid and breach of law, is not sustainable. Mandate of the Explanation is crystal clear that, 'any expenditure' incurred for any purpose which is an offence or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presenting interest income credited by banks but not offered by the assessee for taxation in its return. When the matter came before the Ld. CIT(A), the assessee filed a letter dated 03.09.2011 from HSBC Bank and a letter dated 12.09.2011 from ICICI Bank giving certain details about the interest paid by them to the assessee. The Ld. CIT(A) noticed that both the Banks had mentioned that the revised returns would be filed by them at the earliest, but the same was not filed thereby keeping AIR details unchanged. He, therefore, upheld the disallowance. The assessee is against the sustenance of this disallowance. 8. After considering the rival submissions and perusing the relevant material on record, it is noticed that the AO made disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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