1985 (12) TMI 48

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..... und ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in disallowing a sum of Rs. 25,960 being penalties of sales tax for filing the delayed returns, which were in the nature of interest ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the disallowance of Rs. 11,973, being the payment of penalty on estate duty ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the disallowance of Rs. 55,679, being the bank charges debited by the bank to the assessee's account during the relevant previous year ? " The material facts giving rise to this reference, briefly, are as follows : The assessee is .....

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..... assessee for contravention of statutory provisions could not be held to be expenditure wholly and exclusively laid out for the purpose of the business. Learned counsel for the assessee was unable to point out any reason for taking view different from that taken by this court in Malwa Vanaspati Chemical Co. Ltd.'s case [1982] 135 ITR 221. Following that decision, therefore, our answers to questions Nos. (1), (2) and (3) referred to this court are in the affirmative and against the assessee. Before we proceed to answer question No. (4), it is necessary to refer to certain facts which are relevant. The assessee had a cash credit (hypothecation) account with the State Bank of India. In accordance with the terms and conditions of the agreem .....

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..... at the end of the month and hence the claim on that account should have been made by the assessee in the month or year when the salary had become payable. Upholding this contention, the Tribunal observed as follows : " The salary to the godown-keeper and watchman became payable in the month in which the work was done. Under the circumstances, such salary should have been claimed in the year when the services were rendered by those employees. Simply because debit entries by the bank could not be made in those years, the claim cannot be allowed in the year of account." It is thus clear that the fact that the assessee had a cash credit account with the State Bank of India, that the goods were pledged with the bank to secure that account a .....

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