https://www.taxtmi.com/caselaws?id=11321 Compounding fine paid for unauthorised construction of an additional floor was treated as expenditure incurred for an act that was an offence and prohibited by law. The Karnataka High Court noted that municipal compounding only regularises the violation on payment of a fine and does not change the nature of the payment for income-tax purposes. Applying the Explanation to section 37 of the Income-tax Act, the Court stated that expenses incurred for unlawful conduct cannot be allowed as business deduction, and the contrary pre-amendment authority was inapplicable after the retrospective amendment. The deduction was therefore disallowed. en-us Thu, 30 Oct 2003 00:00:00 +0530 Mon, 05 Jan 2026 15:27:45 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=11321 Compounding fine paid for unauthorised construction of an additional floor was treated as expenditure incurred for an act that was an offence and prohibited by law. The Karnataka High Court noted that municipal compounding only regularises the violation on payment of a fine and does not change the nature of the payment for income-tax purposes. Applying the Explanation to section 37 of the Income-tax Act, the Court stated that expenses incurred for unlawful conduct cannot be allowed as business deduction, and the contrary pre-amendment authority was inapplicable after the retrospective amendment. The deduction was therefore disallowed. Case-Laws Income Tax Thu, 30 Oct 2003 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=11321