1960 (2) TMI 63 - HC - Income Tax

Summary

Issues:
Assessment year 1943-44 - Disallowance of claim by Tribunal
Assessment year 1944-45 - Justification for deduction from claim

Assessment year 1943-44:
The Tribunal disallowed the claim made by the assessee for the assessment year 1943-44, stating that the loss in garments was sustained in previous years as well. However, the Tribunal acknowledged that the demand by military authorities to recover the value of the lost garments was made only in that specific year. The assessee maintained accounts on a mercantile basis, and the loss was only ascertained when the authorities demanded the recovery. The Tribunal accepted that the loss was established in the year of account, and the assessee had to make good the value of the lost garments. The Department recognized that the assessee could not trade in the garments supplied by the military authorities, leading to the conclusion that the pieces themselves were considered lost. Therefore, the claim for loss sustained in the business was justified under the caption of "lost garments."

Assessment year 1943-44 (contd.):
Even though some garments might have been lost in previous years, the fact that only about half of the claim represented the value of garments lost in the relevant year did not affect the claim's validity. Once the loss was established in that year, the entire claim had to be allowed. The Assistant Commissioner's view, which supported the full allowance of the claim, was deemed correct by the High Court.

Assessment year 1944-45:
Regarding the assessment year 1944-45, the Tribunal did not find any justification for deducting from the claim made by the assessee. The Tribunal did not establish that the assessee had been fully paid by the military authorities or that the claimed loss was not proven. The Tribunal's decision to reduce the claim was considered unjustified by the High Court. The Court emphasized that based on the material presented, the whole claim should have been allowed, as there was no valid reason for reducing it.

Conclusion:
The High Court ruled in favor of the assessee for both assessment years, stating that the entire claim should have been allowed. The Court awarded costs to the assessee and counsel's fee of Rs. 250. The questions were answered in the negative, indicating a favorable outcome for the assessee in both instances.