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2014 (11) TMI 800 - HC - Income TaxEligibility of deduction on loss of goods in transit - Trading of importing timber logs in bulk quantity - Reserve Bank of India did not permit the remittance of sale consideration by way of foreign exchange on the ground that the goods never reached the Indian source – Held that:- Once the title of goods has passed to the assessee and the goods was transported at his risk and when he accepted the document negotiated through the bank and acknowledged the liability and when the goods did not reach him, he did sustain loss of the value of goods which he has purchased. In the books of account of the assessee, necessary entries were made though loss was not claimed - The assessee banker approached the RBI for permission to make payment by way of foreign exchange which was refused by RBI - The assesee approached the Insurance company to settle the claim, to which they declined - The assessee was constrained to file the Civil Suit in Mangalore Court against the ship owners, charterers, Insurance company claiming the amount - the assessee did not make entry in the book of accounts for the year 1994-95 showing the loss - However, for the subsequent year, necessary entries were made showing loss and in the return filed and also claimed deduction - When it was not allowed in the subsequent year after writing off the losses, deduction was claimed - both the Appellate Authorities were justified in upholding the claim of assessee and in allowing the deduction – there was no error or infirmity in the order passed by the Appellate Authorities – Decided against revenue.
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