Assessee entered into an agreement with JK Tyre for carrying out manufacturing activity of JK Tyres on job work basis. It failed to produce end product qualitatively according to parameters of JK Tyres and dispute arose between parties.In order to resolve dispute, assessee had to pay a certain sum to JK Tyres so that it could continue to work on behalf of JK Tyre for job work basis and claimed it as revenue expenditure. Assessing Officer held that  w Explanation 1 appended to section 37, disallowed the claim. On appeal the Tribunal held that since expenditure is  not incurred for any infringement of law rather, it was a by-product of commercial activity, said expenditure is  not hit by Explanation 1 to section 37.Addition is deleted. (AY. 2013-14)