J.S. Verma, J.
1. The questions of law referred by the Tribunal to this court for its decision under Section 256(1) of the Income-tax Act, 1961, involve substantially only one point, namely, whether the Tribunal was justified in allowing the deduction of Rs. 32,480 imposed as penalty under Section 8(2) of the M. P. General Sales Tax Act as a business expenditure under Section 37(1) of the Income-tax Act, 1961
2. The contention of the assessee which was accepted by the Tribunal was that the above amount of Rs. 32,480 termed as penalty was merely additional sales tax which was required to be paid by the assessee being the difference between the tax payable at the full rate and the tax payable at the concessional rate. In other words, the assessee's contention was that this amount depicted only the balance amount of sales tax and not any penalty in excess thereof which is permitted by Section 8(2) of the M.P. General Sales Tax Act.
3. According to the decision of this court in Simplex Structural Works v. CIT : 140ITR782(MP) the question whether such an amount can be allowed as deduction as business expenditure depends on the fact whether it was merely a difference between the tax payable at full rate and the tax payable at concessional rate or it was an amount in excess of this difference. It was held that where the amount depicted only the difference between the tax at full rate and the tax at concessional rate, it should be allowed as a deduction under Section 37(1) of the Income-tax Act, 1961. On the other hand, if the amount of penalty is an amount in excess of this difference, also called the balance amount of sales tax (sic), then in the true sense, it is a penalty for Infraction of law to which the earlier decision in CIT v. Malwa Vanaspati & Chemical Co. Ltd : 135ITR221(MP) applies and it cannot be allowed as a deduction under Section 37(1) of the Income-tax Act treating it as business expenditure.
4. It is obvious that the questions referred in the present reference have to be answered on the basis of the above decisions of fact which is decisive for answering the question referred for decision. It must, therefore, be of sales tax which ought to have been paid by the assessee at the time of purchase of goods or it is an amount in excess thereof imposed for infraction of law. In this reference, the statement of case drawn up by the trial court does not take into account this distinction and apparently, for this reason, the factual position in the present case has not been stated. Since the reference is required to be decided by us on the basis of the facts stated in the statement of case, it is not possible to answer the question referred on the basis of the incomplete statement of case which does not set out this significant fact. It is, therefore, necessary to require the Tribunal to submit a further and supplementary statement of case stating these material facts to enable the decision of this reference. We direct accordingly. The case be listed for hearing after receipt of the supplementary statement of case.