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CBDT Bars Income Tax Deduction on Expenditure Incurred to Settle Proceedings Related to Contraventions Under These Acts

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By Amit Sharma
CBDT Bars Income Tax Deduction on Expenditure Incurred to Settle Proceedings Related to Contraventions Under These Acts

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The Central Board of Direct Taxes (CBDT) has barred income tax deduction on expenditure incurred to settle proceedings related to contraventions or defaults under SEBI Act, Competition Acts and Depositories Act.

The notification specifically states that such expenditure will not be considered as incurred “for the purpose of business or profession,” thereby disqualifying it from deduction. The laws mentioned under this notification include:

  • The Securities and Exchange Board of India (SEBI) Act, 1992
  • The Securities Contracts (Regulation) Act, 1956
  • The Depositories Act, 1996
  • The Competition Act, 2002

This directive stems from clause (iv) of Explanation 3 to sub-section (1) of Section 37 of the Income-tax Act, which pertains to disallowance of expenditures incurred in relation to unlawful acts or defaults.

Notification Details

Notification No. 38/2025

Date: 23/04/2025

Click Here To Read Notification

Read More: India Revises Tariff Values For These Imported Goods Effective April 24, 2025

Amit Sharma
Amit Sharma
Amit Sharma is the Content Editor at JurisHour. He has been writing about the Indian legal market. He has covered tax & company litigation stories from the Supreme Court, High Courts and Various Tribunals. Amit graduated from MLSU Law College with B.A.LL.B. and also holds an LL.M. from MLSU, Udaipur, Rajasthan. An Advocate in Taxation, and practised in Tribunals as well as Rajasthan High Court and pursued Masters in Constitutional Law. He started out small with little resources but a big plan to take tax legal education to the remotest locations across India and eventually to the world. His vision is to make tax related legal developments accessible to the masses.

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