TMI Blog1990 (5) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. 3. The facts found by the Tribunal have been stated in the Statement of case : The dispute in this appeal related to the assessees claim for ₹ 6,21,660 on account of loss of ₹ 6,21,660 alleged to have been incurred by it during the relevant accounting year. According to the assessee in the accounting year relevant to the asst. yr. 1971-72 there was a burglary in its factory at 77A, Benaras Road, Howrah, when there was some labour trouble. Due to this burglary, loss of raw materials to the tune of ₹ 3,94,415 and other assets valued at ₹ 2,42,245 occurred. The assessee had deducted the total value of raw materials from the opening stock and the value of other assets from the total assets in its balance sheet. A claim for ₹ 6,36,660 was put up before the insurance company. During the relevant accounting year the assessee settled the claim for a paltry sum of ₹ 6,21,660 in its P L Account. The ITO, however, was of the opinion that the insurance company had not accepted the assessees claim and there was no reason as to why the assessee could not produce its entire evidence relating to the theft and recover the said claim. The rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to the assessees representative, these figures and allegations were accepted by the IT Department and, therefore, it was not open for the ITO now to say that there was no loss or that the loss occurred to the assessee in that year because in the balance sheet for that year, the claim of the assessee payable by the insurance company had been disclosed as an asset and the income of the assessee had been disclosed as an asset and the income of the assessee had been assessed on that basis. Reliance was placed upon some commentaries in which there is a reference to Rangamma vs. Atchama (1846) R.M.I.A. 1 and observations by Lord Chelmsford in Shah Mukhun Lall vs. Baboo Sree Kishan Singh 12 M.I.A. 157 that no person shall be entitled to approbate and reprobate the same deed. It was argued that the Department having accepted that the assessee had business assets in the form of claim against the insurance company, it was not open for it how to say that the assets were not lost during the year or they were not business assets and were of only capital nature. After carefully considering the facts and circumstances of the case we are of the opinion that the nature of assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich continued for a pretty long period. The question arose whether the loss should have been claimed in the year when the misappropriation took place or when the loss became actual and certain. It was held that although the embezzlement took place between 17th October, 1939 and 24th October, 1940 the assessees claim for the same in the asst. yr. 1942-43 (accounting year ending on 12th April, 1942) could be admitted as such because the matter was ultimately compromised in August, 1941, when the clerk paid some amount to the assessee in full settlement of its claim. Same is the ultimate conclusion arrived at by the Punjab and Haryana High Court in CIT vs . Pretty Cycle Industries where the loss had been incurred in an earlier year but since the amount had not been transferred to the P L Account in that year as import entitlement against export was yet to be received, the assessee was held entitled to set off the actual loss in a later year. A decision of the Calcutta High Court in this behalf is CIT vs . Shew Bux Jahurilal [1962]46ITR688(Cal) wherein it was held that the assessee was not bound to show all anticipated loss and was entitled to have the matter re-adjusted when the los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question has been correctly answered by the Tribunal so far as the question raised in R.A. No. 166 (Cal) of 1984 is concerned. 8. The Tribunal has remanded the case back to the CIT(A) for taking fresh decision on the merits of the assessees claim. In other words, whether the assessee had actually suffered loss claimed by it will have to be decided by the CIT(A). Assuming that assessee has suffered loss, the question is, in which year the loss is allowable. The fact found by the Tribunal indicates that the loss took place during the accounting year relevant to the asst. yr. 1971-72. The Tribunal also found that the assessee in that year of account did show depletion of stock in its balance-sheet and/or P L account but the corresponding loss was not claimed by the assessee as business loss because the current assets included a sum of ₹ 6,36,660 on account of insurance claim, which was made in respect of the alleged loss as being recoverable. The claim was finalised only in the year of account relevant to this assessment year. The insurance company accepted a small part of the claim and rejected the rest and that is why irrecoverable amount has been claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain debts to be irrecoverable it would be within his power under s. 10(2)(xi) to allow the same in computing the profits. The power is only restricted in one direction namely that where the assessee has posted an entry or entries in the books of account the amount to be estimated as irrecoverable is not to exceed the amount actually written off as irrecoverable by the assessee. 11. The Allahabad High Court in the case of U.P. Vanaspati Agency vs. CIT reported in (1968) 68 ITR 12 held, where assessee has been dispossessed of money or property, it cannot be treated as loss because of mere dispossession. There must be consciousness of loss in the mind of the person, who has been dispossessed of money or property, before it can be treated as loss consciousness of company being lost should be attributed to the assessee only after a reasonable amount of time is spent in making efforts for recovery of the sum of ₹ 12,000. The principle laid down in this case is that here the assessee made a claim for loss as soon as the property was lost or destroyed. At first the assessee found that there was no likelihood of recovery of property and then it claimed for loss. When th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
