https://www.taxtmi.com/caselaws?id=11411 Deductibility under section 37 turns on the true character of the statutory payment, not on the label used in the banking law. The statutory scheme for cash reserve and reserve balance defaults showed a compensatory element in the first default, because the payment operated as an incidence of banking business and the Reserve Bank could waive it for sufficient cause; that component was deductible. The same scheme treated repeated defaults more severely through fines and prosecution, showing a penal character for second and subsequent defaults; that component was not deductible. The assessments therefore had to be split between compensatory and penal elements, with deduction allowed only for the former. en-us Tue, 12 Nov 2002 00:00:00 +0530 Tue, 07 Mar 2017 18:00:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=11411 Deductibility under section 37 turns on the true character of the statutory payment, not on the label used in the banking law. The statutory scheme for cash reserve and reserve balance defaults showed a compensatory element in the first default, because the payment operated as an incidence of banking business and the Reserve Bank could waive it for sufficient cause; that component was deductible. The same scheme treated repeated defaults more severely through fines and prosecution, showing a penal character for second and subsequent defaults; that component was not deductible. The assessments therefore had to be split between compensatory and penal elements, with deduction allowed only for the former. Case-Laws Income Tax Tue, 12 Nov 2002 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=11411