- (1.) This appeal is preferred to challenge the order dated 30.3.2012 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur.
(2.) The facts necessary to be noticed for adjudication of this appeal are that the Anti Evasion Wing of the Sales Tax Department found that the assessee (appellant) was transferring goods from its factory situated in the State of Rajasthan to its godown situated in the State of Gujarat. The transfer of goods was essentially inter State sale. It was also found that a purchase entry for Rs.1,97,035/- relating to the financial year 2002-03 was not accounted for in the regular books of account. On being calling upon by the Sales Tax Department the assessee considered the default and get the infringement of law compounded by depositing a sum of Rs.12.15 lacs besides the tax and interest thereon. A claim was made by the assessee for having deduction as per Section 37(1) of the Income Tax Act against the amount paid to the Sales Tax Department for compounding the infringement of law. As per the assessee the amount aforesaid was a trading loss, thus, is deductible as business expenditure. The claim made by the assessee was not accepted, thus, he preferred an appeal before the Commissioner of Income Tax (Appeals) and that came to be allowed in part vide order dated 24.4.2008. To challenge the order dated 24.4.2008 revenue preferred an appeal before the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur and that came to be accepted under the order impugned.
(3.) While questioning correctness of the order aforesaid the submission of counsel for the assessee is that the assessee acted bonafidely in transfer of goods to Gujarat as inter-branch transfers, but that was technically termed as inter-State sales. The assessee on knowing about the same satisfied his liability by getting infringement of law compounded. Such compounding amount deserves to be deducted in view of Section 37(1) of the Act.;