COMMISSIONER OF INCOME TAX Vs. SIMCO METERS LIMITED

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal has referred the following question of law for the opinion of this Court under s. 256(1) of the IT Act, 1961 :

(2.) THE assessee is a public limited company. It paid a sum of Rs. 16,061 as damages under s. 14B of the Employees' Providence Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act'). THE assessee claimed that this sum of Rs. 16,061 paid as damages should be allowed as business expenditure, on the ground that it was paid out for the purpose of business and the amount paid under s. 14B of the Act did not amount to penalty or fine. THE ITO disallowed the claim on the ground that the amount paid represented the penalty paid for not complying with the statutory provisions of the Act and hence, the expenditure was not incurred for the purpose of the business.

(3.) MR. R. Meenakshisundaram, learned counsel appearing for the assessee agrees that the matter may be remitted to the Tribunal to determine the question whether the entire amount paid would be business expenditure and he submitted that in so far as it relates to the portion, which is compensatory in nature, that can be allowed as business expenditure.