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| The Tax Publishers2020 TaxPub(DT) 0192 (Del-Trib) INCOME TAX ACT, 1961
Sedction 37(1)
Liquidated damages were expenditure incurred on account of contractual default, and such contractual liability could not be treated as a penal liability, therefore, no deduction could be disallowed.
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Business expenditure - Allowability - Liquidated damages incurred on account of contractual liability -
Assessee claimed deduction of liquidated damages paid by it. AO treated the same as penalty and denied deduction. Assessee contended that damages were incurred on account of contractual liability.Held: As evident liquidated damages were expenditure incurred on account of contractual default, and contractual liability could not be treated as a penal liability, therefore, no deduction could be disallowed.
Followed:CIT v. S.A. Builders Pvt. Ltd. (2008) 299 ITR 88 (P&H) : 2008 TaxPub(DT) 684 (P&H-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 2(22)(e)
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