9911796707
TMI Blog2000 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty paid under rule 173Q of the Central Excise Rules, 1944, and the amount paid in lieu of confiscation of goods, could be allowed as a deduction in computing the income of the assessee. The assessee is a manufacturer of excisable goods and is required to comply with the Central Excise Act and the Rules framed thereunder. The infraction of the provision of that Act and the Rules exposes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to hold that these penalties should be treated as business expenditure. The expenditure which can be deducted in connection with the business carried on by the assessee is the expenditure which can properly be regarded as such. Penalties paid for violating the law in the course of the conduct of the business cannot be regarded as deductible expenditure as the assessee is expected to carry on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. The fine so paid cannot be regarded as compensatory as the fine levied was not for recovery of duty which ought to have been, but had not been paid. This court in the case of CIT v. Chemical Constructions [2000] 243 ITR 858, has held that it is only compensatory element in a levy termed penalty, that is eligible for being regarded as business expenditure, and that it is only that part whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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