2010 (12) TMI 1188 - AT - Income Tax

Summary

Issues Involved:
The judgment involves consideration of disallowance of claimed loss of stock-in-trade in transit, estimation of agricultural income, and disallowance of claimed business loss.

Disallowed Loss of Stock-in-Trade:
The appeal concerned the disallowance of Rs. 97,48,441 claimed as loss of stock-in-trade in transit. The assessee's goods were seized and forfeited by the Customs and Border Protection Force of USA during transit to Mexico. The issue was whether this loss could be allowed as a business loss. The tribunal held that since the stock-in-trade was confiscated for violation of USA statutory provisions, it should be allowed as a business loss. The tribunal relied on precedents where losses incurred in the course of business activities were allowed as deductions.

Estimation of Agricultural Income:
The second appeal involved the estimation of agricultural income. The assessee claimed Rs. 17,48,875 as agricultural income, but the Assessing Officer restricted it to Rs. 7.5 lakhs, assessing the balance as undisclosed income. The tribunal noted that the assessee owned 130 acres of land, cultivating mango trees and paddy. Despite the lack of proper books of account, the tribunal found no reason to disbelieve the assessee's claim. It held that the estimation made by the assessee was reasonable, and without any basis, the Assessing Officer could not disallow the claim. The tribunal set aside the lower authorities' orders and deleted the disallowance.

Disallowance of Business Loss:
In the third appeal, the issue was the disallowance of Rs. 46,44,420 claimed as business loss due to the seizure and confiscation of pharmaceutical goods exported to Mexico. The tribunal, following the reasoning in a previous case, allowed the claimed loss as a business loss. It set aside the lower authorities' order and directed the Assessing Officer to allow the claimed amount as a business loss.

Conclusion:
The tribunal allowed all three appeals of the two assessees, holding in favor of the assessees in each issue considered.