General conditions for Deductions - (New) Section 34 / (Old) Section 37(1)

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.... while computing the income chargeable under the head "Profits and gains of business or profession".  if ALL of the following are satisfied: • Not covered elsewhere: It should not fall under specific deduction sections sections 28 to 33, 44 to 49, 51 and 52  • Not capital in nature: • Capital expenses (li....

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....benefit or perquisite in any form to a person, who may or may not be carrying on a business or exercising a profession, when its acceptance by the person is in violation of any law or rule or regulation or guideline governing the conduct of that person; or • (c) compounding an offence under any law in force in or outside India; or • (d) settling proceedings initiated in r....

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.... iv. the expenditure should have been incurred during the previous year. EXPLANATION 1 TO SECTION 37(1): Illegal Payments  Any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expend....

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....ence or which is prohibited by law [ W.e.f. 01.04.2022 Inserted by Finance Act, 2022 ] For the removal of doubts, it is hereby clarified that the expression "expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law" under Explanation 1, shall include and shall be deemed to have always included the expenditure incurred by an assessee,- ....