9911796707
TMI Blog1990 (3) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... had issued a letter of authority in favour of the assessee to permit the assessee to import drugs and liquid paraffin. On the strength of such letter of authority the assessee had placed the necessary orders with the suppliers abroad for import of goods. In the meantime, the Chief Controller of Imports Exports ordered that there was a possibility that the import licences were forged. This authority, therefore, confiscated the goods and initiated enquiry. The assessee filed an application in the Bombay High Court, obtained an interim stay against the customs authorities, got some of the goods released against the bank guarantee and incurred considerable expenses. The assessee claimed before the ITO that the amount paid by way of guaranteed margin of profit to the limited company and other expenses incurred should be allowed as a loss in the year of account. The ITO rejected this claim on the ground that the transaction was not reflected in the assessee's trading and profit and loss account, only the account of the limited company was reflected in the balance-sheet, the matter was pending in the court and the transaction could not be said to have been completed and, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emature, the transaction was not complete, the sale of the goods had not been effected and, therefore, it was not possible to determine the margin of profit on these sales. The case filed by the assessee against the limited company was still pending before the High Court. It was not clear as to who had forged the documents constituting import licences. Therefore, the CIT (Appeals) was not justified in allowing the assessee's claim for deduction. 5. Shri Dastur for the assessee argued that this is not a case where the deduction is claimed on account of penalty. The assessee had opened the Letter of Credit for clearing the goods on the basis of import licences which it believed or had reason to believe to be bona fide and genuine import licences. It had paid an amount of Rs. 17,73,004 as mentioned in the letter of authority issued by the limited company and, therefore, what was claimed by way of deduction was an amount which had been spent out and which constituted commercial outgoing. The CIT (Appeals) was, therefore, justified in the decision that he took. 6. We have considered the submissions made by both sides and have gone through the three paper books filed. Certain relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-8-1981 addressed to the Secretary, Ministry of Finance and other connected authorities like the Dy. Chief Controller of Imports Exports, Collector of Customs, etc., called upon them to withdraw and/or cancel the orders cancelling the afore-mentioned licences and to release the goods seized under the various seizure memos and permit it to clear the consignment of drugs and other goods. In the meantime, the assessee filed a Writ Petition against the Union of India and others and an order on the said Writ Petition being Writ Petition No. 1131/1981 was made by the High Court of Judicature at Bombay on 29-11-1984. In this Writ Petition, the limited company was entered in as the fifth respondent. The Court held that the petitioners (the assessee herein) were not served with any notice to show cause and that the orders were passed by the Dy. Chief Controller of Imports Exports without hearing them. The Court discussed some of the provisions of the Imports Exports (Control) Act, 1947 and section 147 of the Customs Act, 1962 and observed that these provisions sufficiently indicate that considerable and adverse civil consequences could result to the letter of authority holder by can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument, he filed a copy of the M/s. Pacific Exports to show that all expenses inclusive of guaranteed profit and those required to be incurred for retirement of documents, customs duty, etc., were debited to the account of the limited company, which gave the letter of authority to the assessee for exploitation of the licences held by it and the sale proceeds realised on the sale of such imported goods were credited to the same account and the difference between the credit and debit was shown as profit or loss when the transaction was complete. When asked as to why in the present case while making the claim for deduction of losses the fact that goods, which were imported, were sold and the further fact that the sale proceeds were credited to the account of the limited company, was not brought to the notice of the revenue authorities. Shri Dastur argued that this transaction had been interrupted consequent to the confiscation of the licences, institution of legal proceedings, the order by the Court in a Writ Petition, and, therefore, it was not possible to arrive at the difference between the sale proceeds realised and the expenses incurred. 9. We have carefully considered the subm ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
