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2019 (8) TMI 571 - HC - Income TaxDisallowance of business loss - fire incident causing the loss and the payment of the amount of loss - HELD THAT:- The Court is of the view that the plea of the Assessee ought to have been accepted in the first instance by the AO. Assessee placed on record the agreement under which it was obliged to bear the loss for shortage of stock. Assessee also placed on record the statement of account in terms of which it had to pay the company ₹ 2 lakhs towards shortage of stock. It is not as if the Assessee did not make an effort to ascertain the details. It was informed that on account of fire, those details could not be provided as the records had been destroyed. This was not something in the control of the Assessee. On its part it gave the full details to the AO including the FIR number reporting the loss of records due to the fire. The Court fails to appreciate how the Assessee could have done anything more to substantiate the fact that it had to pay ₹ 2 lakhs to the company towards the shortage of stock. The fact of the Assessee having actually paid the company the said amount is also not in dispute. Revenue submitted that even in earlier AYs deductions have been claimed by the Assessee on account of shortage of stock for the varying amounts. The Court fails to see how this could be a factor that works against the Assessee. Being in the business of running a showroom for wearing apparels, shortage of stock is not an unusual phenomenon. This Court answers the question of law framed in the affirmative i.e. in favour of the Assessee and against the Revenue. The impugned orders of the AO, CIT (A) and ITAT are accordingly set aside. The appeal effect will be given after permitting deduction of ₹ 2 lakhs in computing the income for the AY in question.- Decided in favour of assessee.
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