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of <h1>Supreme Court denies deduction for compensation paid in breach of contract</h1> <h3>Swadeshi Cotton Mills Company Limited Versus Commissioner Of Income-Tax, UP. (No. 2)</h3> Swadeshi Cotton Mills Company Limited Versus Commissioner Of Income-Tax, UP. (No. 2) - [1967] 63 ITR 65 The Supreme Court dismissed the appeal of a public limited company regarding the disallowance of a deduction claimed for compensation paid for breach of contracts related to the purchase of textile machinery. The court held that the payment was a capital expenditure to avoid unnecessary investment in assets, not for the purpose of earning profits, and therefore not eligible for deduction under the Income-tax Act. The decision was based on the nature of the payment and previous legal precedent.
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