NATHU RAM AND CO. Vs. CIT

JUDGEMENT

(1.) THE following question has been referred for the opinion of this Court under Section 256 of the Income Tax Act:

(2.) THE brief facts of the case are that the assessee firm filed its return for the assessment year 1983 84. A fire had occurred in one of the forests taken on lease by the assessee and the assessee lodged a claim of Rs. 2,50,800 with the insurance company. The insurance company only paid an amount of Rs. 1,87,000. The assessee claimed that an amount of Rs. 63,800 which was the difference between the amount of loss suffered by it and claimed from the insurance company should be treated as its loss. The assessing officer came to the conclusion that since the assessee had debited all the expenses in connection with exploitation of the forest lot and preparation of the timber scants in its P&L account and did not show the value of closing stock of the scants which were burnt in the fire, the assessee was not entitled to claim the loss of Rs. 63,800.

(3.) THE assessing officer thereafter took up the proceedings in terms of the order of the CIT. During the course of these proceedings (assessee) filed a petition under Section 144A of the Income Tax Act before the Inspecting Assistant Commissioner, Chandigarh in which he sought issuance of directions to the Income Tax Officer, Palampur, that the loss of Rs. 63,800 claimed by the assessee against which the Income Tax Officer, Palampur was proposing to make addition of Rs. 1,87,178 in respect of exploitation of assessee's forest lot. The case of the assessee was that an amount of Rs. 1,87,178 should be added to his income for the assessment year 1983 84 and it be allowed further loss of Rs. 63,800. The Inspecting Assistant Commissioner disposed of this petition with the following directions: