M/S. MADDI VENKATARAMAN & CO. (P) LTD. vs THE COMMISSIONER OF INCOME TAX

The Supreme Court addressed the interpretation of Section 28 and Section 40-A(3) of the Income Tax Act, 1961, in relation to the deductibility of Rs. 2.95 lakh claimed by the assessee as business expenditure. The Court held that the amount was not allowable as a deduction due to the violation of the Foreign Exchange (Regulation) Act, 1973, as the transaction was illegal. Consequently, the claim for deduction was denied, affirming the lower authorities' decisions.