COMMISSIONER OF INCOME TAX Vs. KAMANI TUBES LIMITED

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961, at the instance of the Revenue, the Tribunal has referred the following two questions of law for opinion :

(2.) LEARNED counsel for the parties are agreed that the controversy involved in question No. 1 is covered by the decision of this Court in CIT vs. Indokem Pvt. Ltd. (1981) 22 CTR (Bom) 268 : (1981) 132 ITR 125 (Bom). In that view of the matter, we answer question No. 1 in the affirmative, i.e., in favour of the assessee and against the Revenue.

(3.) THE above observation makes it abundantly clear that a transaction cannot be described as a "speculative transaction" within the meaning of S. 43(5) of the Act where there is a breach of the contract and on a dispute between the parties damages are awarded as compensation. Sec. 73 of the Contract Act deals with the consequences of breach of contract and payment of compensation for loss or damage caused by breach of contract. This section, so far as relevant, reads :