Meaning of “Contract . . . Settled”

Case Name : Cit vs. Shantilal (p.) Ltd.

Citation : [1983] 144 ITR 57 (sc)

Court : Supreme court

Section : 43(5)

Meaning : 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, any satisfaction which he thinks fit. It is quite another matter where instead of such acceptance the parties raise a dispute and no agreement can be reached for discharge of the contract. There is a breach of the contract and by virtue of section 73 of the contract act, the party suffering by such breach becomes entitled to receive from the party who broke the contract, compensation for any loss or damage caused to him thereby. There is no reason why the sense conveyed by the law relating to contracts could not be imported into the definition of ‘speculative transaction’.

Case Name : Thakurlal shivprakash poddar vs. Cit 

Citation : [1979] 116 itr 190 (mp)

Court : Madhya pradesh high court

Section : 43(5)

Meaning : According to the shorter oxford dictionary, vol. Ii, p. 1856, ‘Settled’ means to come to terms or agreement with a person. Oxford dictionary, vol. Viii, part ii, p. 559, Says ‘to arrange matters in dispute’; to come to terms or agreement with a ‘person’. The expression ‘a contract is periodically or ultimately settled’ must be construed as ‘the contract is periodically or ultimately determined or concluded or disposed of’. The words ‘contract settled’ used in the definition of ‘speculative transaction’ should not be construed in the narrow sense so as to take in only such cases of settlement before the expiry of the due date for the performance of the contract. Therefore, it is not possible to give a narrow meaning or interpretation to the word ‘settled’ in the aforesaid definition.