Punitive charges like damages, interest and penalty whether are allowed as deductions under the Income Tax Act if the same are compensatory in nature? Article in this January 2012 issue of "Tax Amicus" while discussing the same, concludes that Maxwell’s faith in the judiciary stands vindicated. Amendments in the Central Excise and Customs Tariff, as made by the Finance Act 2011, have come into force from 1-1-2013 and consequently many notifications have been amended to reflect the change in classification. Customs duty rates under various FTAs have been reduced, while Delhi High Court has held that amendment in license subsequent to import is valid. Allahabad High Court has directed payment of interest @ 12% in case of delay in refund of encashed bank guarantee. Under Service tax, exporters have been given option to avail automatic refund of Service tax and Karnataka High Court has allowed Cenvat credit of service tax paid for celebrations. VAT rates have been increased in Puducherry and Mizoram while e-payment has been made compulsory in Delhi. Under Income Tax, this issue covers order of full bench of Delhi High Court holding that expenditure on removal of encroachments facilitates existing business and is revenue in nature.
29 March 2013