https://www.taxtmi.com/caselaws?id=237554 A redemption fine paid in customs proceedings may be deductible under section 37(1) of the Income-tax Act if its true character is compensatory or reparatory rather than penal. The governing test is the nature of the payment, not its label, and the Explanation to section 37(1) excludes only amounts that are penal in substance. Where the customs order shows that goods were redeemable on payment of fine in lieu of confiscation and the personal penalty has been deleted, the payment is treated as compensation for release of the goods. On that basis, the redemption fine is allowable as a business deduction. en-us Mon, 05 Aug 2013 00:00:00 +0530 Sat, 21 Jun 2025 15:26:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=237554 A redemption fine paid in customs proceedings may be deductible under section 37(1) of the Income-tax Act if its true character is compensatory or reparatory rather than penal. The governing test is the nature of the payment, not its label, and the Explanation to section 37(1) excludes only amounts that are penal in substance. Where the customs order shows that goods were redeemable on payment of fine in lieu of confiscation and the personal penalty has been deleted, the payment is treated as compensation for release of the goods. On that basis, the redemption fine is allowable as a business deduction. Case-Laws Income Tax Mon, 05 Aug 2013 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=237554