9911796707
TMI Blog2006 (10) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of punishment - the payment was in effect intended to compensate the loss on account of delay in making the payment and was not by way of penalty for breach of law - where the amount paid is in the nature of compensation, the same will be allowable X X X X Extracts X X X X X X X X Extracts X X X X ..... and allowed the same with the following observations : "6. So far as the assessee's cross-objection is concerned, in the assessment order the Income-tax Officer himself had stated that from the scrutiny of record, it was found that the fine was incurred by the assessee for making belated payments of the said excise duty. Now, making belated payments would indirectly benefit the assessee inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of default under section 36B of the Punjab Excise Act, 1914, was incidental to trade and was allowable as such. In these circumstances, we are of the opinion that the amount paid can be considered to be legitimate business expense of the assessee, though technically it may be called penalty. We, accordingly, allow the cross-objection and delete the disallowance." 3. We have heard learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding for payment of such impost notwithstanding the nomenclature of the impost as given by the statute, to find whether it is compensatory or penal in nature. The authority has to allow deduction under section 37(1) of the Income-tax Act, wherever such examination reveals the concerned impost to be purely compensatory in nature. Wherever such impost is found to be of a composite nature, that is, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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