1966 (9) TMI 32 - SC - Income Tax

Summary

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.