Income tax

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jagadeesh

jagadeesh (Querist)
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04 May 2015 Penalty paid due to violation of traffic rules is allowed or disallowed under income tax act

Nikhil Kaushik

Nikhil Kaushik (Expert)
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04 May 2015 all penalties paid on account of violation of any law should not be allowed...

jagadeesh

jagadeesh (Querist)
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04 May 2015 Thank you. May I know under which section

CA. SHIVA SHANKARA R. SHETTY

CA. SHIVA SHANKARA R. SHETTY (Expert)
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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.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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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."

Nikhil Kaushik

Nikhil Kaushik (Expert)
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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.

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