TMI Blog1990 (1) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 paid by the assessee company to Vulcan Industries for premature termination of the agreement between them was revenue expenditure of the assessee? (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of 25.03,000 representing actuarially valued liability for gratuity for the year 1976 was not an allowable deduction in computing the total income of the assessee company for the asst. yr. 1977-78 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the commission payments of ₹ 70,667 to senior management staff were required to taken into consideration for the purpose of s. 40A (5) of the Act? 2. So for as the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue nature and after the agreement was terminated, the payment that was made, did not bring into existence any capital of enduring nature. The while expenditure was on the revenue account. The contract was entered into in course of the usual business and the termination was made as the assessee thought it as the business prudence required it. When such a termination was made and such usual termination compensation was paid, this termination did not affect in any manner whatsoever the framework of the business as also the pattern of the business of the assessee. 5. The Supreme Court in the case of the CIT vs. Ashok Leyland Ltd. reported in 1973 CTR (SC) 9: (1972) 86 ITR 549(SC) observed as follows: There is no doubt that, as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccurring in the future through that relationship, whether pecuniary losses or commercial inconveniences, is just as much for the purposes of the trade as the making or the carrying into effect of a trading agreement. Accordingly, the question referred by the Department is answered in the affirmative and in favour of the assessee. 6. With regard to question No.1 which is at the instance of the assessee, it is now concluded by decision of the Supreme Court in the case of Sajjan Mills Ltd. vs. CIT Anr. reported in (1985) 49 CTR (SC) 193: (1985) 156 ITR 585(SC). Following the said judgement of the Supreme Court, this question of law is answered in the affirmative and in favour of the Revenue. 7. With regard to question No. 2, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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