If there is a conflict between two demons, it is their right to work out their differences through violence. Killing another demon is allowed, by law.
Although there is no punishment for killing another demon, the living demon does take on any favors that the dead demon owed. This usually means that they may suddenly be in debt to the Master of the deceased demon.
If the demon now owes substantial favors to more than one Master (Their previous one as well as the deceased demon) then it is possible for one Master to consolidate the debt through favor swapping. This can however be a complex procedure, and the Demon that owes the favors may owe additional favors for taking up the valuable time of the Demon Master's accountants.
In the end although there is technically no punishment for the killing of another demon, it often ends with a substantial increase in favor debt, displeasure of the deceased demon's Master, and an all around bad time for the demon who survives.
Demons rarely kill other demons, if they can help it.
-Year one Demonic Law and Punishment guidelines, textbook excerpt