how to judge u/s 37 (urgent)

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vipin (Querist)
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10 December 2009 A pharma co. has made payment to GOVT. with interest since co. was selling medcines above GOVT. specified M.R.P.
please tell me that whether payment is penal OR compensatory in nature u/s 37(prohibited by any law).
If possible tell me basis of answer Or any case law since I have to prove the point before the co. & CA firm .

CA Chandra Kishore Bajpai

CA Chandra Kishore Bajpai (Expert)
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10 December 2009 your query is not very much clear give more facts to discuss

vipin

vipin (Querist)
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10 December 2009 my question is w.r.t sec. 37 of income tax which disallows certain payment which are offences Or prohibited by any law.
A payment will be disallowed if penal in nature. whether payment is penal OR compensatory in nature is MAIN THING TO DECIDE. SITUATION:
GOVT. HAS PRESCRIBED M.R.P FOR CERTAIN MEDICINES . A pharma. co. has violated this notified M.R.P & hence made payment with interest consequent to order of GOVT. DEPTT.
Please decide the situation with discussing the reasons for answer If possible. PLEASE REPLY!!!!!

rahul14121985@rediffmail.com IF POSSIBLE PLEASE REPLY AT FOLLOWING ADDREESS.

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vipin

vipin (Querist)
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10 December 2009 THANKS MR. BAJPAI FOR REPLYING BUT I AM NOT ABLE TO SEE YOUR ANSWER . I CAN SEE ONLY 2 QUESTION AND YOUR FIRST REPLY ONLY . KINDLY REPLY ME AT MY E-MAIL ADDRESS.
THIS IS URGENT.

vipin

vipin (Querist)
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10 December 2009 ?????

Jag Bhushan Sharma

Jag Bhushan Sharma (Expert)
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11 December 2009 The Govt. Deptt. has charged interest goes to show that they first must have calculated amount over-charged by you over the total quantity supplied by you during the period under review. From this it seems the amount over-charged by you and recovered by Govt. Deptt. is compensatory in nature and interest paid is penal in nature.