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Issues: Assessment of damaged goods in closing stock for income tax purposes.
Analysis: The petitioner, a firm assessed to income tax, claimed that goods worth Rs. 1,56,174 were damaged and should be excluded from the closing stock value for the assessment year 1976-77. However, the Income-tax Officer found discrepancies in the claim, stating that the stock could have been written off when damaged but wasn't, and the bank, where the key to the godown was kept, did not report the damage in writing. The Commissioner of Income-tax (Appeals) and the Appellate Tribunal both held that the petitioner failed to prove the damage to the goods. The Appellate Tribunal emphasized that the sales tax authorities did not confirm the claim of damaged goods, and the bank manager could not provide the exact amount of damage, leading to the rejection of the petitioner's plea to exclude the amount from the closing stock. The petitioner sought to refer two questions of law to the court regarding the treatment of the damaged goods in the closing stock. However, the court found that the sales tax authorities did not admit the claim, as confirmed by the Appellate Tribunal, and that the petitioner could not prove the damage to the goods worth Rs. 1,56,174. The court emphasized that these were factual findings, not legal questions, and therefore, no referable question of law arose from the Tribunal's order. Consequently, the court dismissed the petition, stating that the questions raised were not referable questions of law and the petition lacked merit. In conclusion, the court upheld the decision of the Appellate Tribunal, emphasizing that the petitioner failed to substantiate the claim of damaged goods worth Rs. 1,56,174 in the closing stock for the assessment year 1976-77. The court clarified that the issues raised were factual in nature and did not give rise to any legal questions for referral to the court. Thus, the petition was dismissed, affirming the Tribunal's decision regarding the treatment of the damaged goods in the closing stock for income tax assessment purposes.
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