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2019 (10) TMI 1260 - AT - Income TaxSpeculation loss - Loss arising on breach of contracts - assessee in the instant case has paid the towards compensation for breach of contract and claimed it as business loss - CIT(A) however held that the contract resulting in payment of compensation did not amount to speculative transact ion and directed the AO to allow the amount as business loss - HELD THAT:- Hon’ble Supreme Court in CIT vs. Shantilal (P. ) Ltd. [1983 (7) TMI 1 - SUPREME COURT] held that the transact ion cannot be described as a ‘speculative transactions’ within the meaning of Section 43(5) of the Act where there is a breach of contract and on a dispute between the parties damages were awarded as compensation by an arbitration award. The award of damages for breach of contract is not the same thing as the party to the contract has intended to settle the contract following a breach or non-performance of the contract. Such payment towards breach is not akin to the word ‘settled’ used in Section 43(5) - In view of the decision of the Hon’ble Supreme Court and the decision of various High Courts following the principles laid down by the Hon’ble Supreme Court, we do not see any error in the conclusion drawn by the CIT(A). We thus decline to interfere. - Decided against revenue.
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