Compensation paid for Contractual Non-Fulfilment allowable

Sugam Park Vs DCIT (ITAT Kolkata) Introduction: In a recent landmark judgment by ITAT Kolkata, the tribunal addressed the nature of compensation charges as they relate to the non-fulfilment of contractual obligations. The main point of contention was whether such compensations can be considered penal in nature, especially if they don’t involve a violation of any law. Analysis: The case revolves around the assessee, Sugam Park, who entered an agreement with the Asansol Durgapur Development Authority to construct a residential township. According to the agreement, failure to complete the c...