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“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

Manasukh Velji Shah, Mumbai vs. ACIT, Central Circle -1, Thane

In the result, ground no.1 is allowed

ITA 4960/MUM/2024[2019-20]Status: DisposedITAT Mumbai05 Jun 2025AY 2019-20

Bench: Shri Amit Shukla & Shri Girish Agrawalassessment Year: 2019-20

For Appellant: Shri. Subodh Ratnaparkhi, CAFor Respondent: Shri R.R. Makwana, Addl. CIT
Section 139Section 143(3)Section 36(1)(iii)Section 37(1)

business or profession of the assessee; (v) Expenditure has not been incurred for any purpose which is an offence or which is prohibited by law. 5.4. As there is no cause for disallowance, assessee submitted that deduction for business expenses have to be allowed in the hands of the assessee

Ramesh Velji Shah, Mumbai vs. ACIT, Central Circle -1, Thane

In the result, ground no.1 is allowed

ITA 4959/MUM/2024[2019-20]Status: DisposedITAT Mumbai05 Jun 2025AY 2019-20

Bench: Shri Amit Shukla & Shri Girish Agrawalassessment Year: 2019-20

For Appellant: Shri. Subodh Ratnaparkhi, CAFor Respondent: Shri R.R. Makwana, Addl. CIT
Section 139Section 143(3)Section 36(1)(iii)Section 37(1)

business or profession of the assessee; (v) Expenditure has not been incurred for any purpose which is an offence or which is prohibited by law. 5.4. As there is no cause for disallowance, assessee submitted that deduction for business expenses have to be allowed in the hands of the assessee

Assistant Commissioner of Income Tax, Delhi vs. Remfry & Sagar, New Delhi

In the result, all the appeals of the Revenue are dismissed

ITA 5429/DEL/2024[2022-23]Status: DisposedITAT Delhi30 May 2025AY 2022-23

Bench: Ms. Madhumita Roy & Shri Khettra Mohan Roy

For Appellant: Shri K.V.S.R. Krishna and Shri Aman Goel, CAsFor Respondent: Ms. Monika Singh, CIT-DR
Section 37

note that the disallowance which is contemplated under Section 37 is expenditure incurred for any purpose which is an offense or a purpose prohibited by law. It is thus manifest that it is principally the purpose for which the expenditure is incurred which would be decisive of whether ... liable to be disallowed. Regard must also be had to the fact that the expression "prohibited by law" is coupled to the commission of an offense. It is, therefore, apparent that the expenditure which the provision intends to be ignored and disallowed is that which may be expended for commission

Assistant Commissioner of Income Tax, Delhi vs. Remfry & Sagar, Delhi

In the result, all the appeals of the Revenue are dismissed

ITA 5428/DEL/2024[2021-22]Status: DisposedITAT Delhi30 May 2025AY 2021-22

Bench: Ms. Madhumita Roy & Shri Khettra Mohan Roy

For Appellant: Shri K.V.S.R. Krishna and Shri Aman Goel, CAsFor Respondent: Ms. Monika Singh, CIT-DR
Section 37

note that the disallowance which is contemplated under Section 37 is expenditure incurred for any purpose which is an offense or a purpose prohibited by law. It is thus manifest that it is principally the purpose for which the expenditure is incurred which would be decisive of whether ... liable to be disallowed. Regard must also be had to the fact that the expression "prohibited by law" is coupled to the commission of an offense. It is, therefore, apparent that the expenditure which the provision intends to be ignored and disallowed is that which may be expended for commission

Assistant Commissioner of Income Tax, Delhi vs. Remfry & Sagar, Delhi

In the result, all the appeals of the Revenue are dismissed

ITA 5427/DEL/2024[2020-21]Status: DisposedITAT Delhi30 May 2025AY 2020-21

Bench: Ms. Madhumita Roy & Shri Khettra Mohan Roy

For Appellant: Shri K.V.S.R. Krishna and Shri Aman Goel, CAsFor Respondent: Ms. Monika Singh, CIT-DR
Section 37

note that the disallowance which is contemplated under Section 37 is expenditure incurred for any purpose which is an offense or a purpose prohibited by law. It is thus manifest that it is principally the purpose for which the expenditure is incurred which would be decisive of whether ... liable to be disallowed. Regard must also be had to the fact that the expression "prohibited by law" is coupled to the commission of an offense. It is, therefore, apparent that the expenditure which the provision intends to be ignored and disallowed is that which may be expended for commission

Assistant Commissioner of Income Tax, Delhi vs. Remfry & Sagar, Delhi

In the result, all the appeals of the Revenue are dismissed

ITA 5426/DEL/2024[2018-19]Status: DisposedITAT Delhi30 May 2025AY 2018-19

Bench: Ms. Madhumita Roy & Shri Khettra Mohan Roy

For Appellant: Shri K.V.S.R. Krishna and Shri Aman Goel, CAsFor Respondent: Ms. Monika Singh, CIT-DR
Section 37

note that the disallowance which is contemplated under Section 37 is expenditure incurred for any purpose which is an offense or a purpose prohibited by law. It is thus manifest that it is principally the purpose for which the expenditure is incurred which would be decisive of whether ... liable to be disallowed. Regard must also be had to the fact that the expression "prohibited by law" is coupled to the commission of an offense. It is, therefore, apparent that the expenditure which the provision intends to be ignored and disallowed is that which may be expended for commission

Assistant Commissioner of Income Tax, Delhi vs. Remfry & Sagar, Delhi

In the result, all the appeals of the Revenue are dismissed

ITA 5425/DEL/2024[2017-18]Status: DisposedITAT Delhi30 May 2025AY 2017-18

Bench: Ms. Madhumita Roy & Shri Khettra Mohan Roy

For Appellant: Shri K.V.S.R. Krishna and Shri Aman Goel, CAsFor Respondent: Ms. Monika Singh, CIT-DR
Section 37

note that the disallowance which is contemplated under Section 37 is expenditure incurred for any purpose which is an offense or a purpose prohibited by law. It is thus manifest that it is principally the purpose for which the expenditure is incurred which would be decisive of whether ... liable to be disallowed. Regard must also be had to the fact that the expression "prohibited by law" is coupled to the commission of an offense. It is, therefore, apparent that the expenditure which the provision intends to be ignored and disallowed is that which may be expended for commission

ACIT Circle-16(2), New Delhi vs. Maximal Infrastructure Private Limited, New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 1253/DEL/2020[2015-16]Status: DisposedITAT Delhi30 May 2025AY 2015-16

Bench: Ms. Madhumita Roy & Shri Manish Agarwalthe Acit, Circle 16(2) Vs. Maximal Infrastructure Room No. 308, 3Rd Floor, Private Limited C.R. Building, I.P. Estate R-13, 2Nd Floor, Greater New Delhi – 110002 Kailash-1 New Delhi – 110002 "थायीलेखासं./जीआइआरसं./Pan/Gir No: Aacct3615R Appellant .. Respondent

For Appellant: Ms. Rajkumari, CAFor Respondent: Sh. Virender Kumar Singh, Sr
Section 143Section 143(3)

declared policy of Government and occasioned by failure of assessee 's conduct was an offence or that it did anything that was prohibited by law, payment in question did not fall within mischief of Explanation below section 38(12) – Held, yes - whether, therefore, assessee's claim was to be allowed

Deputy Commissioner of Income Tax Central Circle-2(4) Mumbai, Mumbai vs. Avanse Financial Services Limited, Mumbai

In the result, the appeal filed by the revenue is dismissed

ITA 473/MUM/2025[2022-23]Status: DisposedITAT Mumbai28 May 2025AY 2022-23

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Shri. Pranav ShahFor Respondent: Shri. Ram Krishn Kedia, SR. DR
Section 143(2)Section 143(3)Section 250Section 3Section 37(1)

doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect ... doubts, it is hereby clarified that the expression "expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law" under Explanation 1, shall include and shall be deemed to have always included the expenditure incurred by an assessee, — (i) for any purpose which

Dy. Commissioner of Income Tax Central Circle-2(4), Mumbai vs. Avanse Financial Services Limited, Mumbai

In the result, the appeal filed by the revenue is dismissed

ITA 472/MUM/2025[2021]Status: DisposedITAT Mumbai28 May 2025

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Shri. Pranav ShahFor Respondent: Shri. Ram Krishn Kedia, SR. DR
Section 143(2)Section 143(3)Section 250Section 3Section 37(1)

doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect ... doubts, it is hereby clarified that the expression "expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law" under Explanation 1, shall include and shall be deemed to have always included the expenditure incurred by an assessee, — (i) for any purpose which

ACIT, Circle-21(2), New Delhi vs. River Builders (P) Ltd., New Delhi

Appeal is dismissed

ITA 9446/DEL/2019[2016-17]Status: DisposedITAT Delhi05 May 2025AY 2016-17

Bench: Sh. Satbeer Singh Godara & Sh. Naveen Chandraita No. 9446/Del/2019 : Asstt. Year : 2016-17 Acit, Vs M/S River Builders Pvt. Ltd., Circle-21(2), C-59, Vivek Vihar, New Delhi-110002 New Delhi-110092 (Appellant) (Respondent) Pan No. Aaecr2730H Assessee By : None Revenue By : Ms. Harpreet Kaur Hansra, Sr. Dr Date Of Hearing: 05.05.2025 Date Of Pronouncement: 05.05.2025 Order Per Satbeer Singh Godara: This Revenue’S Appeal For Assessment Year 2016-17, Arises Against The Cit(A)-7, New Delhi’S In Case No. 10415/410/Cit(A)-7/Del/2018-19 Dated 06.09.2019, In Proceedings U/S 143(3) Of The Income Tax Act, 1961 (In Short “The Act”)

For Appellant: NoneFor Respondent: Ms. Harpreet Kaur Hansra, Sr. DR
Section 143(3)Section 37(1)

limit for which the GDA has approved the project. Compounding fees paid to the GDA is neither in the nature of offence nor prohibited by law. The details of the charges demanded by GDA on account of increased FAR are as under: Rs. 1. Compounding fees ... assessment findings or during the course of hearing that these payments have been made for any purpose which is an offence or prohibited by law; whatsoever, so as to be covered under the above Explanation. 7. We thus conclude in this factual backdrop that the learned CIT(A) herein

Shree Durga Jewellers, Jawahar Nagar Jaipur vs. AO Circle 4 Jaipur, Cr Building Jaipur

In the result, the appeal of the assessee is allowed

ITA 33/JPR/2025[2017-18]Status: DisposedITAT Jaipur29 Apr 2025AY 2017-18
For Appellant: Shri Suhani Meharwal, CAFor Respondent: Shri Anup Singh, Addl. CIT
Section 143(1)Section 143(2)Section 143(3)Section 68

corresponding penal provision in the 2002 Regulations applicable to it -there is no doubt that its actions fell within the purview of "prohibited by law" in Explanation 1 to section 37(1). 25. Furthermore, if the statutory limitations imposed by the 2002 Regulations are kept in mind, Explanation ... denial of the tax benefit cannot be construed as penalizing the assessee pharmaceutical company. Only its participation in what is plainly an action prohibited by law, precludes the assessee from claiming it as a deductible expenditure. 34. Interpretation of law has two essential purposes: one is to clarify

ACIT CC 6(1), Mumbai, Bkc vs. Roshni Enterprises, Mumbai

ITA 4472/MUM/2024[2018-19]Status: DisposedITAT Mumbai25 Apr 2025AY 2018-19

Bench: Shri Amit Shukla & Shri Girish Agrawal

For Appellant: Shri Nishit Gandhi, AdvocateFor Respondent: Smt. Sanyogita Nagpal, CIT DR
Section 143(3)Section 69

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT

ACIT CC 6(1), Mumbai, Bkc vs. Roshni Enterprises, Mumbai

In the result, all the three appeals by the revenue are dismissed

ITA 4471/MUM/2024[2019-20]Status: DisposedITAT Mumbai25 Apr 2025AY 2019-20

Bench: Shri Amit Shukla & Shri Girish Agrawalassessment Year: 2021-22 & Assessment Year: 2019-20 & Assessment Year: 2018-19 Assistant Commissioner Vs Roshni Enterprises Of Income Tax Central 519, The Great Eastern Circle 6(1), Mumbai Gallaria, Sector 04, Bkc, Mumbai Nerul 400706. Room No. 445, 4Th Floor, Kautilya Bhawan, Bkc, Mumbai 400051. Pan: Aasfr6639Q Appellant Respondent Present For: Appellant By : Shri Nishit Gandhi, Advocate Respondent By : Smt. Sanyogita Nagpal, Cit Dr Date Of Hearing : 28.01.2025 Date Of Pronouncement : 25.04.2025 O R D E R Per Girish Agrawal: These Three Appeals Filed By The Revenue Are Against The Orders Of Ld. Cit(A)-54, Mumbai Vide Order Nos. Itba/Apl/S/250/2024- 25/1065343505(1), Itba/Apl/S/250/2024-25/1065343031(1) & Itba/Apl/S/250/2024-25/1065342652(1), Dated 03.06.2024, Passed Against The Assessment Orders By Dcit, Central Circle 6(1), Mumbai, U/S. 143(3) R.W.S.147 Of The Income-Tax Act, 1961 (Hereinafter Referred To As The “Act”), Dated 27.02.2024 For Assessment Year 2021-22, Dated M/S. Roshni Enterprises Ays 2021-22, 2019-20 & 2018-19 28.02.2024 For Assessment Year 2019-20 & Dated 31.03.2023 For Assessment Year 2018-19. 2. Grounds Taken By The Revenue Are Reproduced As Under:

For Appellant: Shri Nishit Gandhi, AdvocateFor Respondent: Smt. Sanyogita Nagpal, CIT DR
Section 143(3)Section 69

Para 16]. So far as the heads of expenses are concerned, the revenue was unable to show how any of them were prohibited by law, or amounted to offences. The assessee's business was to transport export goods, and ensure their door to door delivery in Moscow. Confirmations had been ... well as in the post-search assessment proceedings. There is nothing brought on record to establish that expenses incurred by the assessee were prohibited by law or amounted to offence. Explanations furnished for explaining the entries found recorded in the seized material have also not been controverted in the assessment

ACIT CC 6(1), Mumbai, Bkc vs. Roshni Enterprises, Mumbai

In the result, all the three appeals by the revenue are dismissed

ITA 4470/MUM/2024[2021-22]Status: DisposedITAT Mumbai25 Apr 2025AY 2021-22

Bench: Shri Amit Shukla & Shri Girish Agrawalassessment Year: 2021-22 & Assessment Year: 2019-20 & Assessment Year: 2018-19 Assistant Commissioner Vs Roshni Enterprises Of Income Tax Central 519, The Great Eastern Circle 6(1), Mumbai Gallaria, Sector 04, Bkc, Mumbai Nerul 400706. Room No. 445, 4Th Floor, Kautilya Bhawan, Bkc, Mumbai 400051. Pan: Aasfr6639Q Appellant Respondent Present For: Appellant By : Shri Nishit Gandhi, Advocate Respondent By : Smt. Sanyogita Nagpal, Cit Dr Date Of Hearing : 28.01.2025 Date Of Pronouncement : 25.04.2025 O R D E R Per Girish Agrawal: These Three Appeals Filed By The Revenue Are Against The Orders Of Ld. Cit(A)-54, Mumbai Vide Order Nos. Itba/Apl/S/250/2024- 25/1065343505(1), Itba/Apl/S/250/2024-25/1065343031(1) & Itba/Apl/S/250/2024-25/1065342652(1), Dated 03.06.2024, Passed Against The Assessment Orders By Dcit, Central Circle 6(1), Mumbai, U/S. 143(3) R.W.S.147 Of The Income-Tax Act, 1961 (Hereinafter Referred To As The “Act”), Dated 27.02.2024 For Assessment Year 2021-22, Dated M/S. Roshni Enterprises Ays 2021-22, 2019-20 & 2018-19 28.02.2024 For Assessment Year 2019-20 & Dated 31.03.2023 For Assessment Year 2018-19. 2. Grounds Taken By The Revenue Are Reproduced As Under:

For Appellant: Shri Nishit Gandhi, AdvocateFor Respondent: Smt. Sanyogita Nagpal, CIT DR
Section 143(3)Section 69

Para 16]. So far as the heads of expenses are concerned, the revenue was unable to show how any of them were prohibited by law, or amounted to offences. The assessee's business was to transport export goods, and ensure their door to door delivery in Moscow. Confirmations had been ... well as in the post-search assessment proceedings. There is nothing brought on record to establish that expenses incurred by the assessee were prohibited by law or amounted to offence. Explanations furnished for explaining the entries found recorded in the seized material have also not been controverted in the assessment

Bajaj Hindusthan Sugar Limited, Mumbai vs. Deputy Director of Income Tax, CPC

In the result, the appeal of the assessee is dismissed

ITA 814/MUM/2025[2023-24]Status: DisposedITAT Mumbai23 Apr 2025AY 2023-24

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

For Appellant: Shri Kirit Kamdar,ARFor Respondent: Shri Leyaqat Ali Aafiqui (Sr. AR)
Section 143(1)Section 143(1)(a)Section 143(3)Section 37Section 37(1)Section 7Q

deduction. Further, Explanation 1 to section 37(1) provides that any expenditure incurred for any purpose which is an offence, or which is prohibited by law is deemed to be not incurred for the purpose of business or profession. As per the above explanation, the allowance of expenditure would depend ... date under the EPF/ESI Act, to the extent there was shortfall in deposit of the employees' contribution/ESI contribution, the same deduction was prohibited by law and was deemed to be to income. Here the assessee had sought deduction u/s 37 of the Act with respect to interest paid on delayed

Dy. Commissioner of Income Tax, Circle-1(1), Hyderabad vs. Union Bank of India, Hyderabad

In the result, the appeal of revenue is partly allowed for statistical

ITA 316/HYD/2019[2015-16]Status: DisposedITAT Hyderabad21 Apr 2025AY 2015-16
For Appellant: Shri S. Ananthan, C.A. &For Respondent: Ms. M Narmada, CIT-DR
Section 143(3)Section 14ASection 36(1)Section 36(1)(vii)Section 36(1)(viia)Section 36(1)(viii)Section 36(1)(vila)

deviation in implementation of KYC-AML guidelines is penal in nature for violation of any law, which is an offence, or which is prohibited by law and therefore, cannot be allowed as deduction. The Assessing Officer had also distinguished the case law relied upon by the assessee in the case ... section 37(1) of the Act, any expenditure incurred by an assessee for any purpose, which is offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance should be made in respect

Union Bank of India (Erstwhile-Andhra Bank), Mumbai vs. Dy. Commissioner of Income Tax, Circle-1(1), Hyderabad

In the result, the appeal of revenue is partly allowed for statistical purposes

ITA 193/HYD/2019[2015-16]Status: DisposedITAT Hyderabad21 Apr 2025AY 2015-16

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdia

For Appellant: Shri S. Ananthan, C.A. &For Respondent: Ms. M Narmada, CIT-DR
Section 143(3)Section 14ASection 36(1)Section 36(1)(vii)Section 36(1)(viia)Section 36(1)(viii)Section 36(1)(vila)

deviation in implementation of KYC-AML guidelines is penal in nature for violation of any law, which is an offence, or which is prohibited by law and therefore, cannot be allowed as deduction. The Assessing Officer had also distinguished the case law relied upon by the assessee in the case ... section 37(1) of the Act, any expenditure incurred by an assessee for any purpose, which is offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance should be made in respect

Saboo Silk Emporium, Mumbai vs. DCIT Circle 19(3), Mumbai

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 427/MUM/2025[2017-18]Status: DisposedITAT Mumbai03 Apr 2025AY 2017-18

Bench: SHRI VIKRAM SINGH YADAV (Accountant Member), SHRI RAHUL CHAUDHARY (Judicial Member)

Section 143(2)Section 143(3)Section 250Section 80G

return of income, however, these are not in the nature of 5 Saboo Silk Emporium payments towards any offenses or which is prohibited by law and even though assessee has suo-moto disallowed the same while filing the return of income, where the expenses are duly allowable under law

M/S. R R Kapoor Company, Ahmednagar vs. The Income-Tax Officer, Ward-2, Ahmednagar

In the result, the appeal of the assessee is partly allowed

ITA 2645/PUN/2024[2014-15]Status: DisposedITAT Pune02 Apr 2025AY 2014-15

Bench: Dr.Manish Borad

For Appellant: Shri Pramod S. ShingteFor Respondent: Shri Aviyogi Ambadkar
Section 143(2)Section 143(3)Section 36(1)(va)Section 37

loss account. Ld. AO treated the said sum being the payment made towards offence for the activity 3 M/s. R.R. Kapoor Company prohibited by law and applied Explanation 1 to section 37 disallowing the said sum. I however on going through the record notice that the assessee turnover is approximately ... have incurred had they carried out the contract. Further, I find that the alleged sum cannot be equated to payment for any offence prohibited by law and it is merely a business expenditure which deserves to be allowed u/s.37 of the Act. Finding of ld.CIT(A) is thus set aside