BATALA TIMBER HOUSE Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE following question of law has been referred to this court for its opinion at the instance of the assessee : "whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order passed by the Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961 ?"

(2.) THE brief facts giving rise to this reference are that the assessee claimed a loss of stock of Rs. 70,000, which was allegedly destroyed in fire which took place on the night between 30/31st March, 1968. This was claimed for the assessment year 1968-69, relevant to the accounting period ending March 31, 1968. In this fire, besides the damage to the building, the assessee suffered a loss of stock-in-trade. Since the building and the stock-in-trade stood insured with the Oriental Fire and General Insurance Co. Ltd. , New Delhi, the assessee claimed compensation for the loss suffered by it in the aforementioned fire, from the insurance company. The insurance company entrusted the case to the surveyors and assessors for the purpose of assessing the correct figure of loss for compensation purposes. The assessors, vide their report dated June 22, 1968, assessed the value of loss to the stock-in-trade at Rs. 39,449. The relevant portion of the report of the surveyors and assessors is as follows: To cost of goods as per list drawn from Rs. salvage as per details given in the enclosed 55,364statement: Less deduction @ 5% being allowance for 2,768 old and/or shop soiled and/or damaged goods. 52,596 R Rs. 52,596b/f Less value of salvage @ 25% as agreed upon by insured with great difficulty after lengthy discussion and persuasion 13,149 39,447 or say 39,445

(3.) THUS, according to the report of the surveyors and assessors, loss of stock-in-trade was to the tune of Rs. 39,445 which the assessee received from the insurance company on October 17, 1968.