https://www.taxtmi.com/caselaws?id=3693 The Supreme Court held that compensation paid for breach of contract is an allowable deduction in income computation, distinguishing it from penalties for breach of law. Relying on precedents like Prakash Cotton Mills 'P Ltd, Murari Lal Ahuja, and Indo Asian Switch-Gears, the Court emphasized that compensation for breach of contract constitutes a business loss and should be deductible. The judgment clarified that penalties for breach of law are not the same as compensation for breach of contract. Consequently, the Court ruled in favor of the assessee, allowing the deduction for the compensation paid for breaching contractual obligations. en-us Wed, 16 May 2007 00:00:00 +0530 Tue, 20 Sep 2011 18:20:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=3693 The Supreme Court held that compensation paid for breach of contract is an allowable deduction in income computation, distinguishing it from penalties for breach of law. Relying on precedents like Prakash Cotton Mills 'P Ltd, Murari Lal Ahuja, and Indo Asian Switch-Gears, the Court emphasized that compensation for breach of contract constitutes a business loss and should be deductible. The judgment clarified that penalties for breach of law are not the same as compensation for breach of contract. Consequently, the Court ruled in favor of the assessee, allowing the deduction for the compensation paid for breaching contractual obligations. Case-Laws Income Tax Wed, 16 May 2007 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=3693