https://www.taxtmi.com/caselaws?id=210166 A payment made under a bona fide out-of-court settlement of civil patent infringement claims was treated as compensatory, not penal, and therefore was allowable as business expenditure under section 37(1) of the Income-tax Act, 1961. The settlement was entered into to avoid the expense and uncertainty of foreign litigation, and the compromise merely recorded resolution of civil disputes without any finding that the assessee had committed an offence or violated patent law. Because the nature of the payment, not its label, governs deductibility, and patent remedies are civil in character, the expenditure was not hit by the Explanation to section 37(1). en-us Mon, 11 Jul 2011 00:00:00 +0530 Wed, 26 Jun 2013 17:31:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=210166 A payment made under a bona fide out-of-court settlement of civil patent infringement claims was treated as compensatory, not penal, and therefore was allowable as business expenditure under section 37(1) of the Income-tax Act, 1961. The settlement was entered into to avoid the expense and uncertainty of foreign litigation, and the compromise merely recorded resolution of civil disputes without any finding that the assessee had committed an offence or violated patent law. Because the nature of the payment, not its label, governs deductibility, and patent remedies are civil in character, the expenditure was not hit by the Explanation to section 37(1). Case-Laws Income Tax Mon, 11 Jul 2011 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=210166