https://www.taxtmi.com/caselaws?id=205320 Ransom paid for the release of a director kidnapped during a business tour was treated as a deductible business expenditure under Section 37(1) of the Income-tax Act, 1961. The court applied the commercial expediency test and accepted that the payment was made to secure the director's release after police efforts failed, so it was laid out wholly for business purposes. The Explanation to Section 37(1) did not bar the deduction because, although kidnapping for ransom is an offence under the Penal Code, there was no law prohibiting payment of ransom to save the victim's life. The expenditure was therefore allowable. en-us Tue, 23 Aug 2011 00:00:00 +0530 Mon, 26 Mar 2012 14:41:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=205320 Ransom paid for the release of a director kidnapped during a business tour was treated as a deductible business expenditure under Section 37(1) of the Income-tax Act, 1961. The court applied the commercial expediency test and accepted that the payment was made to secure the director's release after police efforts failed, so it was laid out wholly for business purposes. The Explanation to Section 37(1) did not bar the deduction because, although kidnapping for ransom is an offence under the Penal Code, there was no law prohibiting payment of ransom to save the victim's life. The expenditure was therefore allowable. Case-Laws Income Tax Tue, 23 Aug 2011 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=205320