9911796707
TMI Blog2014 (11) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is engaged in the business of trade in importing timber logs in bulk quantity. The assessee entered into contract with M/s Ply International, USA on 02.09.1993 for import of teak logs of Tanzanian origin by shipment to be made in June and July 1994, as per different terms and conditions mentioned in the contract. The sale was on C & F basis where insurance was to be covered by buyer and freight was to be paid by the seller. The terms of the contract stipulates that once the goods are accepted on inspection, it was to be considered to be sold and held at the risk and responsibility of the importer i.e., assessee company. 3. The assessee company engaged the services of shipping vessel, M V Hazar through the charterer viz., M/s Ummall Quwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of assessee company and bill of exchange drawn by M/s Ply International against the assessee were presented to the assessee through its banker on 29.08.1994 alongwith invoice raised by the seller M/s Ply International, USA. 5. The assessee accepted the bill of exchange presented by the supplier. However, the assessee company's banker could not remit the payment in the absence of bill of entry. When the banker approached RBI for instructions to remit the foreign exchange without insisting on the bill of entry, the RBI declined the permission. Therefore, the bankers of assessee returned the documents to the seller bank. In those circumstances, the assessee company filed a suit in the Court of Civil Judge, Mangalore, impleading th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of deduction of this loss as the same was not allowed in the assessment for the assessment year 1996-97. 8. The said assessment was disallowed by the assessing authority on the ground that as the title in goods was not transferred to the assessing company, the assessee cannot claim any loss. The assessee was not liable for payment of the cost of logs, in the circumstances, as it falls under the heading of 'Force Majeure'. Further, the assessing authority held that the liability claimed by the assessee is an uncrystalized liability. It was also held as the civil suit was pending and the RBI did not grant permission to remit the foreign exchange, the loss arising out of contingent liability is not allowable. It was observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee during the year relating to assessment year 1995-96 which is reflected in its books of account. In the accounts for the assessment year 1995-96, the invoice value has been shown as purchase, the seller has been shown as 'Creditor' and the goods taken to closing stock as 'goods in transit'. The assessing authority has not questioned these facts in the assessment year 1995- 96. Therefore, the liability is ascertained. 10. When the liability for purchase relates to the assessment year 1995-96, trading loss has been claimed for the assessment year 1996-97, this loss arose due to loss of goods in transit. The assesee did not claim it as a deduction in computation of income for the assessment year 1995-96. Neither di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remittance of sale consideration by way of foreign exchange on the ground that the goods never reached the Indian source. Therefore, the authority were not justified in treating the amount as expenditure and consequently the loss incurred by the assessee and remitting deduction of the said amount. 14. Per contra, learned Counsel appearing for the respondent supported the impugned order. 15. From the aforesaid facts, it is clear that there is no dispute regarding the contract entered into between the parties. The terms of contract stipulates once the teak logs are inspected and loaded in the ship, the title in the goods passes to the buyer. The transportation of the goods is at the risk of the buyer. Therefore, the buyer was expected to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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