TMI Blog1972 (9) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... KHANNA. JUDGMENT The judgment of the court was delivered by HEGDE J.- This appeal by special leave arises from a decision of the Madras High Court in a reference under section 66(1) of the Indian Income-tax, 1922 (to be hereinafter referred to as the Act). As demanded by the assessee the Tribunal submitted the statement of the case to the High Court seeking its opinion on the question: "Whether, on the facts and in the circumstances of the case, the loss of Rs. 1,93,750 was an allowable deduction under section 10 of the Income-tax Act?" Material facts are these: The assessee-respondent was a member of a Hindu undivided family which carried on money-lending business in India and abroad. In the course of such money-lending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness carried on by the assessee. We are unable to appreciate the contention of the department. It is established that the assessee was carrying on business in Malaya when the war was going on. Malaya was within the war zone and, therefore, there was every possibility of that area being bombed. If the assessee had earned any profits out of his business during the war, the department undoubtedly would have considered those profits as assessable income. It is strange that when loss had occurred in such a situation the department should contend that the loss in question was not a business loss. In our opinion, taking into consideration the facts and circumstances of the case the loss occurred must be held to be a loss incidental to the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the replacement value of the destroyed timber, but only a small part of this timber was in fact replaced because the current demand was for timber of a different character. The company accordingly credited in its profit and loss account as a trading receipt only pound 160,824 of the insurance payment; the balance did not appear in the profit and loss account but was entered as a reserve in the balance-sheet. The Special Commissioners held that no part of the sum of pound 477,838 recovered from the insurers was a trading receipt. But the House of Lords held that the whole sum recovered was trading receipt to be taken into account in computing the profits assessable to income-tax under Case 1 of Schedule D and to corporation profits tax. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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