← All Phrases

“prohibited by law”

Business ExpensesSection 37 ExplanationSection 37 Explanation498 judgments

The decision most relied on for prohibited by law is Apex Laboratories Pvt. Ltd. v. CIT (135 Taxmann.com 286), cited in 148 judgments on BharatTax.

Leading authorities on prohibited by law

Apex Laboratories Pvt. Ltd. v. CIT
135 Taxmann.com 286 · 2022 · Supreme Court
148
citing judgments

Expenditure incurred by pharmaceutical companies on freebies provided to medical practitioners is not deductible under Explanation 1 to Section 37(1) of the Income-tax Act, as such gifting is prohibited by the Medical Council Regulations, 2002. The court also held that what is directly prohibited by law cannot be indirectly evaded through contrivance.

Sanjeev Woolen Mills v. CIT
279 ITR 434 · 2005 · Supreme Court
75
citing judgments

The assessee must consistently follow one method of accounting and cannot arbitrarily change it, particularly in contravention of Section 145 of the Income Tax Act. This principle prohibits changes in accounting methods that are not in conformity with the law.

Maddi Venkataraman & Co. (P.) Ltd. v. CIT
229 ITR 534 · 1998 · Supreme Court
72
citing judgments

Expenditure incurred for a purpose prohibited by law or in violation of another statute is not deductible as business expenditure under Section 37(1) as it is against public policy. The Explanation to Section 37 reinforces that such expenditure is deemed not for business.

Haji Aziz & Abdul Shakoor Bros. v. CIT
41 ITR 350 · 1961 · Supreme Court
69
citing judgments

Penalties paid for a breach of law or contravention of statutory provisions are not allowable deductions as business expenditure because they cannot be considered wholly and exclusively laid out for the purpose of the business. This principle is now enshrined in Explanation 1 to Section 37(1) of the Income-tax Act, 1961.

CIT v. Kap Scan and Diagnostic Centre (P.) Ltd.
344 ITR 476 · 2012 · High Court
58
citing judgments

Payment of commission to doctors for referring patients to diagnostic centers or providing gifts, freebies, or hospitality to medical practitioners by pharmaceutical companies is against public policy and cannot be allowed as a business expenditure under Section 37(1). Demanding such benefits is unethical on the part of doctors, and paying them is equally unethical on the part of companies.

Claggett Bronchi Co. Ltd. v. CIT
177 ITR 409 · 1989 · Supreme Court
38
citing judgments

Issuing a notice under section 148 after two years from the end of the relevant assessment year is prohibited by law and makes reassessment proceedings void.

PCIT v. Monnet Ispat & Energy Ltd.
18 SCC 789 · 2018 · Reported
33
citing judgments

The Insolvency and Bankruptcy Code (IBC) overrides other laws, including the Income Tax Act, due to its non-obstante clause in Section 238. Proceedings initiated against a corporate debtor undergoing insolvency are prohibited under Section 14 of the IBC.

Confederation of Indian Pharmaceutical Industry (SSI) v. CBDT
353 ITR 388 · 2013 · High Court
26
citing judgments

Payments made to doctors in violation of Indian Medical Council regulations are considered opposed to public policy and are not deductible as business expenditure under section 37(1). Such payments are to be discouraged.

Judgments citing prohibited by law

Crosseas Capital Services Private Ltd, Mumbai vs. ACIT(Central)-2(4), Mumbai

In the result, all the four appeals filed by the assessee are hereby partly allowed

ITA 3420/MUM/2023[2018-19]Status: DisposedITAT Mumbai26 Feb 2024AY 2018-19

Bench: Shri Amit Shukla & Shri Amarjit Singhassessment Year: 2015-16 Assessment Year: 2014-15 Assessment Year: 2020-21 Assessment Year: 2018-19 M/S. Crosseas Capital Assistant Commissioenr Of Services P. Ltd., Income Tax (Central Suite 37, 5Th Floor, Circle)-2(4), Martin Burn House, Vs. 802, 8Th Floor, 1 Rn Mukherjee Road, Pratishtha Bhavan, Kolkata, Old Cgo Annexe, West Bengal - 700 001 Maharishi Karve Road, Pan: Aaccc5470H Mumbai – 400 020 (Appellant) (Respondent) Present For: Assessee By : Shri Firoze B. Andhyarujina , A.R. & Shri Maneck Andhyarujina, Ar. Revenue By : Shri H.M. Bhatt, D.R. Date Of Hearing : 06.02.2024 Date Of Pronouncement : 26.02.2024 O R D E R Per Bench : All These Four Appeals Are Filed By The Assessee Against The Different Orders Of Commissioner Of Income Tax Passed Under Section 250 Of The Act Pertaining To Assessment Year 2018-19 &

For Appellant: Shri Firoze B. Andhyarujina , A.R. &For Respondent: Shri H.M. Bhatt, D.R
Section 234BSection 250Section 37(1)

exchangers. The AO was of the view that these expenses incurred by the assessee were on the nature of penal charges and prohibited by law. Therefore, claim of such claim was disallowed. 31. The assessee filed appeal before the Ld. CIT(A) and the Ld. CIT(A) dismissed the appeal ... payments made to the stock exchange by the assessee for violation of their regulations are not amounting to an offence or which is prohibited by law, therefore invocation of explanation to section 37 of the Act is not justified. 36. Similarly, we have also noticed the various other judicial pronouncements

Crosseas Capital Services Pvt Ltd, Mumbai vs. ACIT (Central-2(4), Mumba

In the result, all the four appeals filed by the assessee are hereby partly allowed

ITA 3418/MUM/2023[2014-2015]Status: DisposedITAT Mumbai26 Feb 2024AY 2014-2015

Bench: Shri Amit Shukla & Shri Amarjit Singhassessment Year: 2015-16 Assessment Year: 2014-15 Assessment Year: 2020-21 Assessment Year: 2018-19 M/S. Crosseas Capital Assistant Commissioenr Of Services P. Ltd., Income Tax (Central Suite 37, 5Th Floor, Circle)-2(4), Martin Burn House, Vs. 802, 8Th Floor, 1 Rn Mukherjee Road, Pratishtha Bhavan, Kolkata, Old Cgo Annexe, West Bengal - 700 001 Maharishi Karve Road, Pan: Aaccc5470H Mumbai – 400 020 (Appellant) (Respondent) Present For: Assessee By : Shri Firoze B. Andhyarujina , A.R. & Shri Maneck Andhyarujina, Ar. Revenue By : Shri H.M. Bhatt, D.R. Date Of Hearing : 06.02.2024 Date Of Pronouncement : 26.02.2024 O R D E R Per Bench : All These Four Appeals Are Filed By The Assessee Against The Different Orders Of Commissioner Of Income Tax Passed Under Section 250 Of The Act Pertaining To Assessment Year 2018-19 &

For Appellant: Shri Firoze B. Andhyarujina , A.R. &For Respondent: Shri H.M. Bhatt, D.R
Section 234BSection 250Section 37(1)

exchangers. The AO was of the view that these expenses incurred by the assessee were on the nature of penal charges and prohibited by law. Therefore, claim of such claim was disallowed. 31. The assessee filed appeal before the Ld. CIT(A) and the Ld. CIT(A) dismissed the appeal ... payments made to the stock exchange by the assessee for violation of their regulations are not amounting to an offence or which is prohibited by law, therefore invocation of explanation to section 37 of the Act is not justified. 36. Similarly, we have also noticed the various other judicial pronouncements