Liquidated damages claim are allowable for non-fulfilment of business obligations to own customers

DCIT  Vs M/s Hindustan Urban Infrastructure Ltd. (ITAT Kolkata)

Conclusion: Liquidated damages which were in nature of contractual liability on account of non-compliance of business obligations to customers were allowable expenditure.

Held: AO disallowed assessee’s claim of liquidated damages as the same were in the nature of penal liability not allowable as expenditure incurred wholly and exclusively for the purpose of its business. It was undisputed that liquidate

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