Tax deduction on short margin penalty

[Prayag]

As per a Quicko article, penalties cannot be claimed as a business expense -

Expenses which a Trader cannot claim in Income Tax Return

• Personal Expenses – An expense incurred for personal purposes is not deductible.
• Fines & Penalties – The non-compliance or delay in compliance attracts interest and penal consequences. Hence, interest, fine, late fee, penalty, etc. are not a valid deductible.

They also mentioned about it in another thread -

@Quicko

However, the Income Tax Act does not allow claiming an expense paid in the form of penalty. Any expense charged by the broker in the form of a penalty cannot be claimed as a business expense.