TMI Blog1988 (11) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... he business of sale of cotton and cotton seeds and also acts as commission agents. The assessee entered into a contract for the sale of 925 bales of cotton to Elgin Mills Co. Ltd. and Cawnpore Textile Mills Ltd. The assessee could not fulfil its contractual obligation of supplying this cotton to these mills and eventually settled with them by paying them a sum of Rs. 48,158. The question that now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal rightly vacated the addition of Rs. 48,158 on the ground that payments for breach of contract was an allowable deduction ?" There is a thin line that divides what is to be termed as "speculative transaction" as envisaged by sub-section (5) of section 43 of the Incometax Act, 1961 (hereinafter refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al [1986] 162 ITR 520, where it was held that "if the dispute is settled between the parties, then it is not a 'speculative transaction', but if the contract is settled and under the settlement of the contract, damages are paid, it would be a 'speculative transaction"'. In the present case, it will be seen that a finding of fact has been recorded by the Tribunal that the payment of the said sum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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