Penalty paid under the State VAT law on account of seizure of a truck carrying goods with an incorrect waybill was claimed as business expenditure. The Tribunal held that expenditure incurred for infringement of law is hit by Explanation 1 to section 37(1) and is not deductible. However, liberty was granted to the assessee to seek rectification if the penalty was subsequently held to be compensatory in nature. (AY. 2015-16).