Income tax
This query is : Resolved
04 May 2015
Penalty paid due to violation of traffic rules is allowed or disallowed under income tax act
Nikhil Kaushik
(Expert)
04 May 2015
all penalties paid on account of violation of any law should not be allowed...
05 May 2015
Penalty paid due to violation of traffic rules is in the nature of compensation. Therefore such kind of penalties is allowed u/s. 37(1).
However, penalties paid in the nature of punishment is not allowed.
However, penalties paid in the nature of punishment is not allowed.
Nikhil Kaushik
(Expert)
05 May 2015
kindly refer explantion to section 37(1)
"For the removal of doubts, it is hereby declared that 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."
"For the removal of doubts, it is hereby declared that 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."
Nikhil Kaushik
(Expert)
05 May 2015
you may refer the judgment in case of Kranti Road Transport (P.) Ltd. Versus Assistant Commissioner of Income-tax, Circle-2(1).
traffic violation penalties are not compensatory in nature.
traffic violation penalties are not compensatory in nature.
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