TMI Blog1989 (2) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... A. No. 45/(Coch) of 1984, filed by the assessee and one question in R. A. No. 128/(Coch) of 1984, filed by the Revenue. We are concerned with the assessment year 1978-79. The accounting period ended on June 6, 1977. The assessee herein was engaged in the business of exporting cashew kernels. It had entered into a contract with a foreign party known as "Hollander Trading Corporation" for supply of cashew kernels. As per the terms of the contract, the assessee did not export the nuts. It committed breach of the contract. The matter was referred to the arbitration of the Association of Food Distributors, New York, as per the terms of the contract. An award was passed on August 9, 1979. The assessee was required to pay the foreign company a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidated damages and the liability can be said to be crystallised only when the damages is determined and accepted either by private negotiation or determined by an arbitrator or court. In this view of the matter, it was held that an enforceable liability can be deemed to come into existence only when it was determined and fixed by the arbitrators and not when the breach occurred. So, the plea of the assessee for deduction of the amount paid to the foreign company in the sum of Rs. 6,20,848 was negatived. On the second aspect regarding the claim of the assessee for weighted deduction under section 35B of the Act, the Tribunal held that the allowance made by the Commissioner of Income-tax (Appeals) is justified and is in accord with the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under section 35B is allowable on the same ?" We heard counsel for the assessee, Mr. E. R. Venkiteswaran, and counsel for the Revenue, Mr. P. K. R. Menon. The Tribunal has held that the contract entered into by the assessee with the foreign firm "Hollander Trading Corporation", which provided for the supply of cashew kernels, was not produced before the authorities. However, the Tribunal, on the basis of available materials, held that the contract did not provide for payment of any particular amount as damages in case of breach of the contract and the claim by the foreign company was for unliquidated damages. Proceeding further, the Tribunal took the view that it was not a case where the quantum of damages alone was referred to the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our of the Revenue. Regarding the weighted deduction allowed by the Tribunal under section 35B of the Act, counsel for the Revenue contended that the decision in J. Hemchand and Co.'s case has not been accepted by the Revenue. However, it was brought to our notice that a Bench of this court in CIT v. C. Tharian and Sons [1987] 166 ITR 607 has taken the view that the payment made in India is not an allowable deduction. We need not consider this matter in detail since it was brought to our notice that there are circulars issued by the Central Board of Direct Taxes giving administrative relief to assessees, substantially or in part, adopting J. Hemchand and Co.'s case. These circular issued by the Central Board of Direct Taxes are not before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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