Penalty paid to RBI for breach of regulatory directions was...

Penalty paid to RBI for breach of regulatory directions was treated as a regulatory levy and not as expenditure for an offence or infraction of law under Explanation 2 to section 37(1), so the deduction was allowed. CSR expenditure was disallowed because the record did not show that it exceeded the statutory CSR obligation, and prior decisions based on the pre-amendment position did not apply after insertion of Explanation 2. The Tribunal also reiterated that appellate authorities can entertain fresh claims not made before the Assessing Officer, so the bad-debt recovery issue was remitted to the Commissioner (Appeals) and the PSLC taxability issue was remitted to the Assessing Officer for fresh adjudication.