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TMI Blog2014 (4) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills P. Limited [1990 (9) TMI 8 - SUPREME Court] - the amount was expended by the assessee during the course of business, wholly and exclusively for the purpose of business - If the assessee had taken proper steps and charged service tax to the service recipients and deposited with the Government, there was no question of assessee expending such sum - It is only because the assessee failed to do so, that he had to expend the said amount, though it was not his primary liability - this cannot be stated to be a penalty for infraction of law - payment of interest is compensatory in nature and would not partake the character of penalty – Decided against Revenue. - Tax Appeal No. 186 of 2014 - - - Dated:- 21-4-2014 - Akil Kureshi And Sonia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deductible u/s. 37 (1) of the Act only when included in the income of the assessee. Though three separate questions are framed, the issue involved is only one viz., whether a sum of Rs. 23,07,450/- paid by the assessee by way of Service-tax and interest thereon of Rs. 9,36,553/- would be deductible from the income of the assessee under Section 37(1) of the Incometax Act, 1961 { the Act for short}. Brief facts are that the said amount of Rs. 32,44,004/- which included the amount of Service-tax with interest, was paid by the assessee and he claimed deduction thereof as a business expenditure. Undisputedly, the primary liability to pay such service tax was on the service recipient and not the assessee who was the service provider. Under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material on record. The appellant had not collected the service tax on mechanical erection and installation of plant and machinery, structure work, piping work and work contract works for the period from F.Y 2003-04 to 2006-07. There was an audit by the Service Tax Department and a demand of service tax was raised at Rs. 23,07,450/- and interest thereon at Rs. 9,36,553/- which was paid on 16.04.2009 by the appellant. When there is no collection of the service tax, it is impossible to route through P L account. As per Service Tax Act, the appellant is an agent of the Government of India, collecting the service tax and remitting it to the Government Exchequer. The appellant had debited these expenses which have nature of service tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in {1961} 41 ITR 350 therefore is not of any help to the Revenue. It was a case in which the assessee had imported dates from Iraq, at a time when such import was prohibited. Due to this, the dates imported by the assessee by steamers were confiscated by the customs authorities. The assessee was given an option to pay redemption fine and have the dates released. The assessee having accepted such an option, claimed the redemption fine as a deduction in computing its profit as allowable expenditure. In this background, the Supreme Court held that no expenses which was paid by way of penalty for a breach of the law, even though it might involve no personal liability, could be said to be an amount wholly and exclusively laid for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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