S.S.Sodhi, J.

1. The assessee, Murari Lal Ahuja and Sons, Abohar, carries on the business of sale of cotton and cotton seeds and also acts as commission agents. The assessee entered into a contract for the sale of 925 bales of cotton to Elgin Mills Co. Ltd. and Cawnpore Textile Mills Ltd. The assessee could not fulfil its contractual obligation of supplying this cotton to these mills and eventually settled with them by paying them a sum of Rs. 48,158. The question that now arises is "whether this amount was a payment in the nature of a speculative transaction in terms of Section 43(5) of the Income-tax Act, 1961 ?"

2. The Income-tax Officer disallowed the payment of the said sum of Rs. 48,158 holding it to be a speculative transaction, This order was upheld in appeal by the Appellate Assistant Commissioner of Income-tax, Bhatinda. The Tribunal, however, took a contrary view and the disallowance was consequently vacated by it. According to the Tribunal, it was "because of abnormal circumstances that it had to flout the sale agreement to save itself from a ruinous situation and because of the breach of contract, that the resultant compensation was paid in the shape of the set