tax treatment of compensation

One of our client has received compensation towards termination of work contract, is it taxable

in turn my client has terminated the contract of his production contractors and liabile to pay the compensation to them but as on 31st march, they have booked the compensation payable but not paid, my question is

a) whether section 194c is applicable towards the compensation

b) whether such exp is disallowed U/s 43B

c) is there any provisions which deals with payment of compensation on termination of production contract