17 February 2013
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 expenditure.
Therefore the following expenditure are dis allowable as deduction.
Expenditure incurred in defending the assessee in any proceeding for breach of any law relating to sales tax, income tax etc.
Penalty paid for non-payment of sales tax, service tax, excise, customs etc...
Hence in your case, sales tax penalty will not be allowed as deduction under pgbp
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