CIT Vs. IMPERIAL AUTO INDUSTRIES

JUDGEMENT

(1.) PRESENT appeal is filed against the judgment and order dated14.8.2003 passed by ITAT (Delhi Bench CN DLI) in ITANo.1037/Del/1998 and ITA No.1038/Del/1998 for the assessment year.

(2.) PRESENT appeal was admitted on the following substantialquestions of law: -

(3.) LEARNED Tribunal in the impugned order has held that any capital gain or capital loss arises only when there is a transfer of assets within the meaning of Section 2(47) of the Act; the definition of 'transfer' includes the sale exchange or relinquishment of the assets or the extinguishments of any rights therein; in the instant case there is no relinquishment of the assets as due to fire, the asset is lost which could be the extinguishments of the assets. Learned Tribunal, while relying on the judgments of Hon'ble the Supreme Court in the case of Mary Bong & Kyel Tea Industries Ltd., 91 Taxman 11 and in the case of VarnaSilk Mills (P) Ltd., 191 ITR 657, Relied. has held that where the asset is destroyed it will not amount to transfer of the assets. Therefore, claim received from the insurance company against the loss suffered by the assessee due to fire would be revenue loss incurred in the normal course of business and allowable deduction under Section 37(1) of the Act and cannot be treated as capital gain.