Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (11) TMI 732 - AT - Income TaxDisallowance of goods lost due to fire - addition invoking section 29 - assessee has claimed that the impugned loss of stock is revenue loss which occurred during the year and was thus ascertained and confirmed loss and therefore same should be allowed as a deduction - as per AO assessee stocks were insured against damages including damage by fire by the National insurance Co Ltd and therefore the loss incurred by the assessee on account of fire is recoverable under a contract of indemnity i.e. insurance, against the damage from insurance Co and the claim of the assessee has not been decided till date by the insurance Co. Therefore the loss claimed by the assessee is a contingent loss - HELD THAT:- Merely because the assessee has an insurance, it does not mean that assessee has not incurred the loss during the year. Moment the insurance Co determines the loss in terms of the insurance policy obtained by the assessee from the insurance company, naturally the assessee would be reimbursed or compensated for the same. It does not mean that assessee has not incurred the losses. The accident of fire at the premises of the assessee in which it has lost goods due to the fire is one incident. The action of the assessee of obtaining the insurance is altogether a different act to mitigate the loss incurred by the assessee. The claim of the insurance of the assessee from insurance Co would also be subject to many conditions. Merely because the goods of the assessee are insured against the accident of fire, it cannot be said that assessee has not lost goods due to fire - loss of the assessee would be compensated in subsequent year later on, at that particular time such insurance claim received would be chargeable to tax under section 41 (1) of the act as it is against the traded goods. Even otherwise, the trading loss incurred by the assessee is allowable to the assessee in the year in which it is incurred. The case of the assessee is also supported by the decision of MOTAMAL JETHUMAL [1946 (12) TMI 2 - PATNA HIGH COURT] wherein it has been held that loss of/in trade or to fire is allowable as a trading loss irrespective of fact whether any sum is received from insurance Co or not - Decided in favour of assessee.
|