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TMI Blog2014 (8) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... o save and protect themselves and they had received the balance consideration from the auction proceeds - the goods had been sold in auction pursuant to the direction of the Supreme Court - the conduct and action of the assessee was not blameworthy or commanding censure - assessee wanted to set-off the redemption fine from the consideration received by them - assessee had only received the net amount after adjustment of the redemption fine – Decided against Revenue. - ITA 11/2002 - - - Dated:- 7-8-2014 - Sanjiv Khanna And V. Kameswar Rao,JJ. For the Appellant : Mr. Balbir Singh, Sr. Standing Counsel with Mr. Rupender Singhmar and Mr. Abhishekh Singh Baghel, Advocates. For the Respondent : Mr. S. Krishnan, Advocate. ORD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present appeal is whether redemption fine of ₹ 45,00,000/- could be claimed as an expenditure under Section 37 of the Income Tax Act, 1961 (Act, for short) or the same is hit by the Explanation to Section 37 or was not an expenditure, wholly and exclusively for purpose of business. Learned counsel for the Revenue has submitted that the expenditure in question would be barred under the Explanation to Section 37 as redemption fine was paid by way of penalty and as per Section 111(d) of the Customs Act, the goods in question were prohibited goods. 4. Learned counsel for the respondent-assessee has, however, relied upon decision of this Court in Usha Micro Process Controls Ltd. Vs. Commissioner of Income Tax, (2013) 204 DLT 664. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased Isobutanol under REP licence and the same was subsequently purchased by the respondent-assessee on high-sea basis. This was a commercial transaction between two unrelated parties. It is in these circumstances, that the respondent-assessee had applied for clearance of goods in India. Earlier similar goods had been cleared by the Customs authorities under REP licence. The fault or defect in the REP licence was not attributable to the respondent-assessee as the licenses were issued to India Craft. The respondent-assessee was not to be blamed and had not indulged in any offence or incurred any expenditure for the purpose, which was prohibited by law. The respondent-assessee had to pay redemption fine in order to save and protect themselve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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