TMI Blog1986 (6) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... d, therefore, the insurance company paid Rs. 3,51,000 for the launch. From these facts, the ITO came to the conclusion that it was on account of real cost of construction of the launch at Rs. 3,51,000 and, therefore, the cost of construction shown at Rs. 3,31,533 in the books of account could not be accepted. Accordingly, he made an addition of Rs. 19,467. 2.2 In appeal, the AAC deleted the addition on the grounds and submissions of the assessee's counsel before him and in particular relying in the case of Haridas Nathubhai Co. observing that the ITO on similar circumstances did not make any addition on account of unexplained investment for the assessment year 1977-78, the total cost of the vessel was Rs. 4,29,155 as against its insurance for Rs. 6 lakhs which showed a difference of Rs. 1,70,855 between the cost price and the insured amount of the vessel. 2.3 The revenue being aggrieved has preferred this appeal in the Tribunal. 3. Shri Harne, the learned departmental representative contends that the order of the AAC is erroneous in law and on facts of the case. Since there is evidence on record which shows that the assessee insured the launch for Rs. 3,51,000 and received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee itself showed it at Rs. 3,51,000. The prescribed authority for the purpose of insurance accepted it on the satisfaction of rule and law on the subject and verification as he had it for the purpose of insurance. Therefore, the value shown for the purpose of insurance by the assessee is the real value of the launch and the same is proved from the conduct of the assessee and declaration so made in the form meant for insurance purpose. Further, the insurance of the launch is made by the insurance authorities under rule and law meant for insurance purpose. Further more, in the succeeding year, the insurance company paid to the assessee a sum of Rs. 3,51,000 as the cost of the launch and the assessee accepted it. Therefore, it cannot be held that the cost of construction of the launch is as shown by the assessee in the books of account for the assessment year under consideration since the books of account of the assessee has not been rejected by the department; because the entries in the books of account regarding it has been disproved by the conduct of the assessee and the amount paid and received by the insurance company and the assessee. Furthermore, the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the AAC has committed an error in law and on facts in deleting the addition of Rs. 19,467. Hence, we set aside his order and restore that the ITO as in this case the cost of construction of the launch as is shown and declared by the assessee for the purpose of insurance, i.e., Rs. 3,51,000 and also revised it as mentioned above. 8. In the result, the appeal is allowed. Per Shri K. T. Thakore, Accountant Member - I have carefully gone through the order of my learned brother. With utmost respect, I am unable to agree with the conclusion reached by him. The facts lie in a narrow compass. The assessee, an individual, had constructed a launch named 'Satyam Shivam Sundaram' cost of which was shown at Rs. 3,31,533 in the books of account. The ITO on the basis of enquiries found that the assessee had obtained an insurance from United India Fire General Insurance Co. Ltd. for a sum of Rs. 3,51,000. The said launch was destroyed and the insurance company settled the claim at Rs. 3,51,000. The ITO on the basis of this fact came to the conclusion that the cost of the launch should be taken at Rs. 3,51,000 and not at Rs. 3,31,533 as disclosed in the books of account. In this v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction and whether the same could be discredited merely on the basis of the larger insurance cover obtained by the assessee. In my view, therefore, there is absolutely no justification in bringing to tax the impugned amount as unexplained cost of construction. In fact, there, is absolutely no basis to make the said addition. I would, therefore, fully agree with the reasoning and the conclusion of the AAC, more so, when on identical fact a much larger amount was rightly not brought to tax by the ITO. I would, therefore, dismiss the appeal. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT Since there is a difference of opinion between us, we would, therefore, refer the following point of difference to the learned President for placing the same before the Third Member. "Whether, on the facts and in the circumstances of the case, an addition of Rs. 19,467 as unexplained difference in cost of construction of the ship was justified ?" THIRD MEMBER ORDER Per Shri T. D. Sugla, Prssident- There has been a difference of opinion between the members who heard the appeal originally. The point of difference has been stated as under : "Whether, on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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