9911796707
TMI Blog1996 (5) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the Customs and the Imports and Exports (Control) Acts and claimed as business expenditure by the assessee, in spite of the clear cut findings of the Calcutta High Court in the case of Raghubir Prasad Gupta v. CIT [1979] 120 ITR 789?" The brief facts giving rise to this reference are thus : The assessee had imported palm kernel seeds weighing 3776.32 mt. The consignment was covered under S.T.C./H.V.D.C. and not under the open general licence. The Collectors of Customs, Cochin and Calcutta, had confiscated the consignment under section 111(d) of the Customs Act, 1962, and section 3(2) of the Imports and Exports (Control) Act, 1947. The assessee got the goods released after paying Rs. 27 lakhs as fine. The assessee claimed this amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also preferred before the Tribunal along with other issues and the Tribunal set aside the order of the Commissioner of Income-tax (Appeals), as well as that of the Assessing Officer on the ground that in fact, the assessee came to know of this fact by issue of clarification by the State Government, on July 27, 1987, that palm seeds kernel was not covered under the Open General Licence. The Tribunal observed that there was no deliberate violation on the part of the assessee of any law or regulations. It was further observed that as soon as the assessee came across the public notice dated July 27, 1987, he took all reasonable steps to get out of the tricky situation created as a result of the public notice even though the nature of contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raghubir Prasad Gupta [1979] 120 ITR 789, by the Calcutta High Court. There also, the question arose whether the amount paid to the Customs authorities by way of fine in lieu of confiscation of goods imported without valid licence cannot be said to be expenditure incurred wholly and exclusively for the purpose of the business of an assessee and is not deductible under section 37(1) of the Act. In this connection, their Lordships further observed that an infraction of law is not a normal incidence of business and a penalty paid for an infraction of the law is not a business loss in the commercial sense. Therefore, such a payment is not deductible in computing the profits or gains of business under section 28(i) of the Income-tax Act, 1961. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and the goods were liable to be confiscated and a penalty was liable to be imposed under section 167(8) of the Sea Customs Act, 1878. Now, coming to the facts as mentioned above, the palm kernel seeds, was not there in the open general licence ; but the order was placed by the assessee though a clarification was issued on July 27, 1987, by the Government that palm seeds kernel is not covered by the open general licence but still he confirmed the supply even belatedly and the period was extended up to March 31, 1988. On the factual aspect also, it is apparent that the assessee was not bona fide ignorant about the situation, he had taken a risk of ordering such goods which were not included in the open general licence and he only took a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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