https://www.taxtmi.com/caselaws?id=193242 Penalties paid to a foreign government for permitting prohibited imports were held not deductible under section 10(2)(xv) because they were imposed as penal consequences of breaching foreign law rather than expenditures incurred wholly and exclusively for carrying on the taxpayer's business. The assessee bore the onus to prove the payments were necessary incidents of lawful commercial activity; that burden was not discharged. The governing principle applied was that deductible business expenditure must facilitate the earning of profits as part of legitimate operations, whereas payments arising from illegal or prohibited acts do not meet that test, so deduction was disallowed. en-us Mon, 11 Nov 1963 00:00:00 +0530 Wed, 19 Jul 2017 18:22:23 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=193242 Penalties paid to a foreign government for permitting prohibited imports were held not deductible under section 10(2)(xv) because they were imposed as penal consequences of breaching foreign law rather than expenditures incurred wholly and exclusively for carrying on the taxpayer's business. The assessee bore the onus to prove the payments were necessary incidents of lawful commercial activity; that burden was not discharged. The governing principle applied was that deductible business expenditure must facilitate the earning of profits as part of legitimate operations, whereas payments arising from illegal or prohibited acts do not meet that test, so deduction was disallowed. Case-Laws Income Tax Mon, 11 Nov 1963 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=193242