https://www.taxtmi.com/caselaws?id=38714 The court held that the penalty paid by the assessee to the East Punjab Motion Pictures Association was not deductible as business expenditure under section 37 of the Income-tax Act, 1961. The court agreed with the Tribunal that such penalties for breaches of contractual obligations are not allowable as they do not qualify as expenditure laid out wholly and exclusively for business purposes. The court emphasized the need for a clear nexus between the expenditure and the trade, citing precedents that penalties for breaches of law or contracts are not normal incidents of business. The court ruled against the assessee, disallowing the deduction of Rs. 4,300 as revenue expenditure. en-us Tue, 16 Nov 1976 00:00:00 +0530 Thu, 08 Apr 2010 15:14:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=38714 The court held that the penalty paid by the assessee to the East Punjab Motion Pictures Association was not deductible as business expenditure under section 37 of the Income-tax Act, 1961. The court agreed with the Tribunal that such penalties for breaches of contractual obligations are not allowable as they do not qualify as expenditure laid out wholly and exclusively for business purposes. The court emphasized the need for a clear nexus between the expenditure and the trade, citing precedents that penalties for breaches of law or contracts are not normal incidents of business. The court ruled against the assessee, disallowing the deduction of Rs. 4,300 as revenue expenditure. Case-Laws Income Tax Tue, 16 Nov 1976 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=38714