https://www.taxtmi.com/caselaws?id=424663 Compounding fee paid to the West Bengal Fire Services Department for violation of fire safety provisions was held not allowable as a deduction under section 37 of the Income-tax Act, 1961. The payment was made after detection of non-compliance and on pleading guilty before the competent authority, and the compounding order recorded that it related to offences under the West Bengal Fire Services Act, 1950. Because expenditure incurred for an offence or for conduct prohibited by law is barred by Explanation 1 to section 37, the payment retained its penal character and could not be treated as ordinary business expenditure. The disallowance was sustained. en-us Tue, 28 Jun 2022 00:00:00 +0530 Wed, 06 Jul 2022 08:13:43 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=424663 Compounding fee paid to the West Bengal Fire Services Department for violation of fire safety provisions was held not allowable as a deduction under section 37 of the Income-tax Act, 1961. The payment was made after detection of non-compliance and on pleading guilty before the competent authority, and the compounding order recorded that it related to offences under the West Bengal Fire Services Act, 1950. Because expenditure incurred for an offence or for conduct prohibited by law is barred by Explanation 1 to section 37, the payment retained its penal character and could not be treated as ordinary business expenditure. The disallowance was sustained. Case-Laws Income Tax Tue, 28 Jun 2022 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=424663