Assessee-company paid fine/penalty levied upon it by European Commission for violating European Union Competition laws by way of accepting non-compete settlement amount from a European company, such payment could not be disallowed as per Explanation 1 to S.37(1) of the Act . The Tribunal held that what has to be disallowed under Explanation 1 to S.37(1) of the Act is a payment made for contravention of laws in force in India and not of any foreign country . The laws are specific to each of the countries according to their rules and regulations and an offence in one country may not be so in another country . Accordingly addition confirmed by the CIT (A) is deleted . As regards whether allowable as business loss as the income was offered in the earlier year , the matter remanded to the file of AO for verification. (AY. 2014 -15)
Mylan Laboratories Ltd. v. DCIT (2020) 180 ITD 558/ 187 DTR 259/ 204 TTJ 426 (Hyd) (Trib.)
S. 37(1) : Business expenditure – fine/penalty levied upon it by European commission for violating European union competition laws by way of accepting non-compete settlement amount from a European company- Payment could not be disallowed as per Explanation 1 to S. 37(1) of the Act – Allowability of claim as business loss- Matter remanded for verification . [ . General Clauses Act ,1897 , S .3(38) , Indian Evidence Act , 1872 , S. 57(1) , Art . 13 ]