Law: Income Tax Ordinance, 1979

Section: 23,136

(a) Income Tax Ordinance (XXXI of 1979)--- ----S. 136---Question already decided by High Court---Not to be entertained again. (b) Income Tax Ordinance (XXXI of 1979)---S. 23---Deductions---Expenditure incurred or extra amount paid on account of infraction of law---Not to be allowed as admissible deduction---Exceptions stated. Any expenditure on account of infraction of law is not to be allowed. This principle is not to be applied when an extra amount is paid in pursuance of an administrative direction and not in pursuance of infraction of any statute law or rules framed thereunder. If there is no infringement, transgression, violation or infraction of law and an excess amount has been paid on account of some , executive/administrative orders or in accordance with the terms of a contract between the two private parties and the course adopted is on account of business expediency, the expenditure so made must be treated as wholly and exclusively for the purpose of business. If infringement or violation of any law is such that any commission or omission is not warranted in law at all and the course adopted is not permissible under any provision of law, then any penalty and fine imposed by competent authority shall not be treated as an expenditure incurred wholly and exclusively for the purpose of business and shall not be an admissible expenditure, as infraction of law cannot be held to be for the business purposes. However, if the provision of law itself envisages different courses of action and option is available to a person to adopt any one of the courses, then it would not amount to infraction or violation of law, but would come within the precincts and premises of law. Adoption of any one of the courses open to a person under the law shall be deemed to be a compliance of the law and not the infraction or violation thereof. If any extra amount is paid on account of any delayed payment, such extra amount is in the nature of compensation and not in the nature of penalty or fine. For the purpose of fine or penalty, there should be a separate proceeding initiated and conducted by an authority competent in law. An extra amount paid in ordinary course and…

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