Gokal Chand Mital, J.

1. M/s. Maya Ram Jia Lal (hereinafter referred to as the "assessee") carries on business in the sale of wool-tops and manufacture of yarn. During the course of the assessment proceedings for the assessment year 1969-70, the Income-tax Officer found that the assessee paid a sum of Rs. 62,060 to various parties as compensation for non-fulfilling contracts to supply goods to them. The Income-tax Officer came to the conclusion that since there was no written agreement between the parties, the compensation paid for non-fulfilment of the contracts was treated as speculative in nature and was disallowed. On appeal, the assessee furnished before the Appellate Assistant Commissioner the following details regarding the claim of Rs. 62,060.

Name of the party Date of Contract Quantity Contracted Date and Payment of advance received Date of Payment of compensation Amount Paid Rate at Which Paid

Rs. Rs.

M/s. Jay Udhay Hosiery, Madhopuri , Ludhiana15-5-686,000 Kg.17-5-68 _______

1,00010-3-6919,5003-25

M/s. Mammal Sant Lal, Chaura Bazar, Ludhiana1-6-683,500 Lb.5-6-60 _______

3,000 10-3-692,8351-00

M/s. Surinder Kumar Jain &