https://www.taxtmi.com/caselaws?id=12758 Penalty paid for breach of excise law is not ordinary business expenditure because a trader is expected to carry on business in accordance with law. Only the compensatory element of a levy described as a penalty can qualify for deduction. On the stated facts, the penalty under rule 173Q was imposed for violation of excise rules and was not an amount otherwise payable as duty. The fine paid in lieu of confiscation was paid only to retain the goods and was likewise penal, not compensatory. Accordingly, both amounts were treated as nondeductible business expenditure and the result was against the assessee. en-us Thu, 16 Nov 2000 00:00:00 +0530 Thu, 21 May 2009 17:56:08 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=12758 Penalty paid for breach of excise law is not ordinary business expenditure because a trader is expected to carry on business in accordance with law. Only the compensatory element of a levy described as a penalty can qualify for deduction. On the stated facts, the penalty under rule 173Q was imposed for violation of excise rules and was not an amount otherwise payable as duty. The fine paid in lieu of confiscation was paid only to retain the goods and was likewise penal, not compensatory. Accordingly, both amounts were treated as nondeductible business expenditure and the result was against the assessee. Case-Laws Income Tax Thu, 16 Nov 2000 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=12758