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Whether deduction is available

This query is : Resolved 
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(Querist)
17 November 2010 My client is a Doctor. He has paid Rs. 75000/- to the Govt. for not working in small village for the particular period specified in Bond given at the time of study.

So whether this amount is deductible under Income Tax Act.
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CA PARAS BAFNA

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CA PARAS BAFNA (Expert)
17 November 2010 In income tax amount is deductible only when it has got direct nexus with the profession.
This agreed amount payable by him or liability created by the assessee is pertaining to the earlier years when he was not carrying on any profession.
In such circumstances the liability can not be treated his professional liability. In my opinion he should not claim deduction of the amount paid as penalty, compensation or by whatever name in the given circumstances.
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
17 November 2010 The expenditure incurred is not in relation to earing income under the head "income from business or profession". Therefore, deduction under section 37(1) cannot be claimed.
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