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Ritu shrimali (Querist)
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06 April 2011 Dear Sir/Madam,
Whether Amount payable as damages to government on account of shortfall in export target is admissable as expenditure in computing the business income

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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06 April 2011 The payment is in relation to a breach of contract. Generally,such expenditure is allowed under section 37(1) of the Income tax Act,1961. But regarding the fixation of target,if it is related to a condition to import machinery on reduced rate of import duty or such other privileges related to a capital asset, the claim will be disallowed.

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