Y.R.Meena, J. - (1.) By this reference application, the Tribunal has referred the following questions for our opinion : "1. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that Rs. 10 lakhs was agreed to by both the parties as full and final settlement of the dispute between them in March, 1984, is based on any material or perverse ?
(2.) Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that the assessee moved the Calcutta High Court in the Matter No. 338 of 1986 for setting aside the arbitrator's award dated March 14, 1984, so far as it relates to the payment of the balance amount of Rs. 7,00,000 only is based on any material or perverse ?
(3.) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing Rs. 10 lakhs as an allowable deduction in the assessment year 1984-85 ?" 2. The assessee, Todi Tea Co. Ltd., has entered into a contract with Taurus Foundry Private Ltd. During the course of assessment, the Income-tax Officer found that the assessee has created a liability of Rs. 10 lakhs in the previous year, relevant to the assessment year 1984-85. The assessee-company claimed that the assessee has a liability to pay, by way of damages to Taurus Foundry Pvt. Ltd., of 33A, J. L. Nehru Road, Calcutta. It was submitted before the Income-tax Officer that the assessee-company had entered into an agreement with Taurus Foundry Pvt. Ltd., by a letter dated December 15, 1982. As per that letter, the assessee agreed to supply three lakhs Ps. of made tea from its garden during the period July to December, 1983, to Taurus Foundry Pvt. Ltd. By a letter dated December 20, 1982, signed by the director, Sri B. M. Beriwal, Taurus Foundry Pvt. Ltd., agreed upon the stipulation laid down in the said letter dated December 15, 1982. Subsequently, Taurus Foundry Pvt. Ltd., reminded the assessee by various letters of its commitment, but the assessee-company in spite of various reminders by Taurus Foundry Pvt. Ltd., did not respond and could not keep its commitment. Meanwhile the price of the tea increased by Rs. 3 to Rs. 4. per kilogram, more than the price settled in the contract between the parties. 3. While Taurus Foundry Pvt. Ltd., found that the assessee will not supply the tea as agreed upon, the Taurus Foundry Pvt. Ltd., claimed compensation on account of breach of contract to the tune of Rs. 30,00,000.;