2002 (8) TMI 90

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ng year ending on December 12, 1973, the Income-tax Officer noticed that the assessee had debited an amount of Rs. 1,10,534 to the profit and loss account, being the value of 1,110 quintals of rice seized by the Civil Supplies Department. It was urged before the Income-tax Officer that the Government had auctioned the rice seized by the Civil Supplies Department and as such the loss arising on account of such seizure should be allowed as a deduction during the year of account. The Income-tax Officer disallowed the claim of the assessee on the ground that the assessee was not able to adduce any evidence in support of the value of the stock appropriated by the Government. The Appellate Assistant Commissioner confirmed the disallowance by hold .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ee, viz., Kadakatla Rice Mill, Tadepalligudem. The matter fell for consideration before the Revenue Divisional Officer, who passed an order of confiscation. Then the matter was carried before the learned District Judge, who also confirmed the confiscation order. Thereafter it came up before the learned Division Bench of this court in a writ petition. The learned Division Bench of this court held that the confiscation order was invalid. Finally, the matter fell for consideration before the Supreme Court in appeal. The Supreme Court confirmed the order of confiscation while setting aside the order made by the learned Division Bench of this court. The resultant effect is that the order of confiscation of the rice seized by the Civil Supplies D .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... being so, it would be difficult for us to appreciate the case of the assessee that it is entitled for deduction as if it suffered loss on account of the seizure and confiscation of the rice. As the loss sustained by the assessee was due to infraction of law, such loss cannot be treated as a commercial loss incurred by the assessee during the course of activity of trade. In view of the ratio laid down by the Supreme Court in the decision in Haji Aziz and Abdul Shakoor Bros. v. CIT [1961] 41 ITR 350 and in the facts and circumstances of the case, we have no hesitation to say that the loss sustained by the assessee as a result of the confiscation of the rice, which was confirmed by the Supreme Court, is not a commercial loss arising out of tr .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X