TMI Blog1995 (3) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... ersion was that she was carrying cash and the diamonds to her residence for purposes of stock taking on 31-3-1988 when while in transit and before she reached the house, a robbery took place and she was dispossessed of cash and diamonds. A first information report (FIR) was filed with the police but the amount could not be recovered. The assessee filed insurance claim with two companies, ie., National Insurance Company and United India Insurance Company. It appears that the United India Insurance Company Ltd. settled the claim of the assessee in November 1990 by paying a sum of Rs. 1,44,586. We were informed that the other insurance company had still to settle the assessee's insurance claim. 3. The Assessing Officer was of the opinion th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onds and the cash had to be taken home. It was also submitted that stock taking was necessary because that day happened to be the closing day of the accounting year. It was, therefore, submitted that the loss was incurred during the course of business and there was a direct or proximate nexus between the carrying on of the business and the loss that had occurred to the assessee. 6. Referring to the Patna High Court judgment in the case of Mulchand Hiralal v. CIT [1938] 6 ITR 151 on which reliance had been placed by the learned CIT(A). It was submitted that the said case was distinguishable on facts because there was no provision for allowing the loss. It was submitted that the Patna High Court had examined the provisions of the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll. 8. The learned Counsel for the assessee also placed reliance on the Madras High Court decision in the case of CIT v. K.T.M.S.Mahmood [1969] 74 ITR 100. That was a case where an assessee who was a dealer in semiprecious stones, had purchased 750 watches. While he was carrying them to his house late at night, he was waylaid and the watches were stolen. Subsequently, 489 watches were recovered and their sale proceeds were brought to tax as business income. The assessee's claim of loss of Rs, 13,271 was negatived by the Assessing Officer. The High Court finally held that the watches constituted stock-in-trade of the assessee and their transit from the assessee's business premises to his residence was a business operation and hence the los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, submitted that there was no urgency that stock taking must be completed on 31-3-1988 because the same could have been done later and not necessarily on 31-3-1988 itself. It was submitted that in the case of Nainital Bank Ltd, the Supreme Court had mentioned that every loss was not deductible and that the deductible loss must relate to business operation. It was, therefore, submitted that the loss had been correctly disallowed by the revenue authorities. 12. We have carefully considered the rival submissions as also the facts on record. The Assessing Officer has not gone into the quantum of loss, he has in principle, held that the loss is admissible to the assessee. We have, therefore, first to decide whether the loss in the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... watches. In our opinion, this decision supports the case of the assessee so far as the loss of diamonds is concerned. Whether it was for purposes of stock taking or for showing it to the clients or for safe custody, the stock-in-trade did not cease to be so when it was taken out of the business premises. It was to cover such risk that the assessee had taken insurance policies in respect of cash and stock-in-trade. We, therefore, have no difficulty in coming to the conclusion that the loss of stock-in-trade of diamonds amounting to Rs. 3,02, 101 was a business loss in the hands of the assessee and allowable to her. 14. As regards the loss of cash as a result of robbery, the facts stand on different footing. The assessee was neither a mon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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