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Allowability of expenditure under pgbp

This query is : Resolved 
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(Querist)
23 November 2017 whether damages paid to govt of West Bengal of Rs.15,00,000 paid as per the terms of contract due to defects found in flyover constructed before 5 years, from relevant financial year is allowable as business expenditure? The company under consideration is engaged in undertaking civil contracts for infrastructure facility from various companies as well as Central and State Govt's.
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
23 November 2017 The amount of damages so paid is an allowable expenditure since it is in the
ordinary course of business. But supreme court in Travancore sugar's case
reported in (1973) 88 ITR (1) reminded that the surer way of arriving at a
conclusion would be to first ascertain by reference to the document under
which the obligation for incurring the expenditure is created and thereafter
to apply the principles embedded in the court decisions of those facts.
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Anil Ahuja

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Anil Ahuja (Expert)
29 November 2017 Yes allowable u/s.37
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