https://www.taxtmi.com/caselaws?id=23827 Penalty paid for breach of law is not an allowable business deduction under section 37(1) of the Income-tax Act because such expenditure is not laid out wholly and exclusively for business purposes. The decisive test is whether the outgoing is legally permissible under section 37(1), not whether the breach involved moral turpitude or only a technical infraction. Applying the prior binding view, the Madhya Pradesh High Court held that penalty imposed under the Madhya Pradesh General Sales Tax Act could not be deducted as business expenditure, and the claim for deduction was rejected. en-us Wed, 06 Sep 1989 00:00:00 +0530 Thu, 14 Jan 2010 15:20:08 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=23827 Penalty paid for breach of law is not an allowable business deduction under section 37(1) of the Income-tax Act because such expenditure is not laid out wholly and exclusively for business purposes. The decisive test is whether the outgoing is legally permissible under section 37(1), not whether the breach involved moral turpitude or only a technical infraction. Applying the prior binding view, the Madhya Pradesh High Court held that penalty imposed under the Madhya Pradesh General Sales Tax Act could not be deducted as business expenditure, and the claim for deduction was rejected. Case-Laws Income Tax Wed, 06 Sep 1989 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=23827