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2014 (6) TMI 225 - HC - Income TaxDeletion of disallowance of entertainment expenses – Held that:- The Tribunal has correctly come to the conclusion that the expenditure claimed by the assessee on tea, coffee, cold drinks, pan, cigarette, biscuits, crockery are not in the nature of entertainment and looking to the turnover of the assessee, the expenditure is a routine expenditure and customary in nature - Expenditure incurred are for the business considerations and cannot be said to be in the nature of entertainment – Relying upon CIT v. Patel Brothers and Co. Ltd. [1995 (5) TMI 2 - SUPREME Court] - the expenditure for commercial and business expediency, which is normal and not lavish, cannot be said to be falling within the meaning of entertainment expenditure – the order of the Tribunal is upheld - Decided against Revenue. Business income or income from speculation business – Held that:- The assessee has been able to satisfactorily prove that he was able to receive the damages for the breach of the contract and the contract was for supply of goods, it was a business transaction - the damages received was certainly in the nature of business profits and not speculative in nature - there was no question of settling the contract as the cause of action was no longer based on the contract itself but on the breach and settlement of the damages arising from the breach of the transaction does not result from the contract but from the breach - A contract can be settled during the subsistence of the contract and if a breach occurred by the non-performance of the contract or by the actual delivery, a party to the contract settled the amount of damages by paying the difference between the contract price and the market price on the due date of performance that would not amount in law to settling a contract - What has been settled is settling the damages consequent to the breach. Relying upon CIT v. Shantilal P. Ltd. [1983 (7) TMI 1 - SUPREME Court] - The Tribunal was of the view that the assessee received damages for non-performance of the contract and that non-performance of the contract was for reasons beyond the control of the assessee, and the Tribunal was justified in coming to the conclusion that the amount is to be treated as business income and not the income by way of speculative transaction – Decided against Revenue.
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