1993 (1) TMI 47

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....er section 256(1) of the Income-tax Act, 1961, made at the instance of the Revenue, the following question has been referred to us for opinion by the Income-tax Appellate Tribunal : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the contract with Jam Manufacturing Co. Ltd. and the other contract with Sayaji Mills No. 2 resulting in the....

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....d, and instead, compensation is awarded under an arbitration award as damages for a breach of the contract ? A contract can be said to be settled if instead of effecting the delivery or transfer of the commodity envisaged by the contract the promisee, in terms of section 63 of the Contract Act, accepts, instead of it, any satisfaction which he thinks fit. It is quite another matter where instead o....

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....s settled when damages are paid by way of compensation for its breach. What is really settled by the award of such damages and their acceptance by the aggrieved party is the dispute between the parties. The law, however, speaks of a settlement of the contract, and contract is settled when it is either performed or the promisee dispenses with or remits, wholly or in part, the performance of the pro....