ITAT Allows Contract Penalties paid to Govt Authorities as Business Expense

G.L. Construction Pvt Ltd Vs ACIT (ITAT Mumbai) In a recent ruling, the Income-tax Appellate Tribunal (ITAT), Mumbai Bench, has allowed a tax appeal filed by M/s G L Construction Pvt Ltd, setting aside the disallowance of certain payments termed as “penalties” by government authorities. The tribunal held that these deductions, made from the assessee’s bills for non-compliance with contractual terms in road construction projects, were in the nature of business expenditure and not penalties for offences or acts prohibited by law. The case involved the assessment year 2018-19, w...