2009 (11) TMI 41 - HC - Income Tax

Loss on account of leakage / breakage of bottles - The assessee is engaged in trading and distribution of soft drinks and made a claim towards loss on account of leakage/breakage of bottles. The said claim was rejected by the Assessing Officer in absence of evidence to substantiate the same. It was also observed that the assessee was only a distributor and loss claimed was attributable to the principal. This view has been affirmed by the CIT(A) as well as the Tribunal. held that - . Even for claiming loss, the assessee has to establish that loss was factually suffered. All the authorities have concurrently recorded a finding of fact that loss in question was never suffered by the assessee. The said finding is not shown to be perverse. deduction disallowed decided against the assessee

Summary

Issues:
Claim of deduction under section 29 of the Income Tax Act for loss on soft drink bottles due to leakage, breakage, and unserviceable nature.

Analysis:
1. The appellant, engaged in trading and distribution of soft drinks, claimed a deduction for loss on soft drink bottles due to leakage, breakage, and unserviceable nature. The Assessing Officer rejected the claim citing lack of evidence to substantiate it and noted that the loss claimed was attributable to the principal company. This decision was upheld by the CIT(A) and the Tribunal.

2. The Tribunal emphasized the importance of evidence to support the claim, stating that the appellant failed to provide proof of how the stock became damaged. Without substantiation, the claim for loss on soft drink bottles was disallowed. The Tribunal upheld the decision of the Income Tax authorities to disallow the claimed amount of Rs. 4,81,151.

3. The appellant argued that the loss should be deductible under section 29 of the Act as it was incidental to the business. However, the Court found that the appellant failed to establish that the loss was factually suffered. All authorities had unanimously concluded that the loss was not proven to have occurred, and this finding was deemed not to be perverse.

4. Consequently, the Court dismissed the appeal, stating that no substantial question of law arose in the case. The judgment was delivered on November 6, 2009, by Hon'ble Mr. Justice Adarsh Kumar Goel and Hon'ble Mr. Justice Gurdev Singh.