Disallowance of settlement amounts being paid to settle contraventions (WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE)

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..... ely for the purpose of business or profession. 2. Explanation 1 of sub-section (1) of section 37 provides 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. 3. Explanation 3 of sub .....

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..... w and relate to contraventions etc and, therefore, should not be allowed as business expenses. 5. Accordingly, it is proposed to amend the Explanation 3 to sub-section (1) of section 37 of the Act to clarify that expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law under Explanation 1 shall include any expenditure incurred by an assessee to settle p .....

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