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TMI Blog1998 (11) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the revenue is as follows : "Whether, on the facts and circumstances of the case, the penalty paid by the assessee under section 10A of the Central Sales Tax Act, 1956, is an admissible deduction in computing the income from the business of the assessee ?" The assessment year is 1977-78. The assessee is a private limited company engaged in the business of constructing buildings. It ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that a levy is termed as a penalty in a statute is not by itself decisive of its true character, as observed by Malwa Vanaspati Chemical Co. v. CIT (1997) 225 ITR 383 . "The use of tile word 'penalty' the Supreme Court in the provision is neither here nor there". It is only when a levy does not have any compensatory character that it has to be regarded as penalty. In the case of Malwa Vanas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of tax at the full rate is obligatory, and penalty in so far as something more up to 25 per cent. thereon being payable, should the Commissioner so direct. It is, therefore, necessary for the authority to ascertain as to whether the levy termed penalty can only be regarded as such and not in any other manner. Reliance was placed by counsel on the decision of the Supreme Court in the Maddi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which is purely penal, that has to be excluded. Section 10A of the Central Sales Tax Act empowers the authority to impose upon a person, who is guilty of an offence under clause (b), (c) or (d) of section 10 by way of penalty a sum not exceeding one and a half times the tax which would have been levied under sub-section (2) of section 8 in respect of the sale to him of the goods, if the sale h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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