1983 (12) TMI 82 - AT - Income Tax

Summary

Issues:
1. Status of the entity - whether a genuine firm or an AOP.
2. Disallowance of loss claimed on account of breakage.
3. Disallowance of Dharmada charges.
4. Disallowance of donation debited to Bareilly branch.
5. Addition of Rs. 150.

Detailed Analysis:

1. Status of the entity - The issue revolved around the status of the entity, whether it was a genuine firm or an AOP. The CIT (A) found that the entity was an AOP, not a firm, based on previous findings. The Tribunal, in a previous year's order, held that since the CIT (A) did not address the issue of cancellation of registration and maintained the status of a registered firm, the question of changing the status did not arise. The Tribunal also referenced a High Court decision supporting this view. Consequently, the Tribunal concluded that the contention regarding the status did not arise from the CIT (A)'s order.

2. Disallowance of loss claimed on account of breakage - The assessee claimed a loss of Rs. 31,095 due to breakage, which the IAC partially disallowed. The IAC allowed only Rs. 4,095 of the claimed loss, disallowing the balance. The assessee argued that the loss was due to goods seized by Excise authorities following a prohibition order. The Tribunal, after reviewing the facts, allowed the entire loss of Rs. 31,095, considering factors like pilferage, moisture, mishandling by authorities, and transportation losses. The Tribunal agreed that the loss was not limited to breakage but also included the loss of liquor itself, ultimately deleting the disallowed amount.

3. Disallowance of Dharmada charges - The IAC disallowed a sum of Rs. 1,451 as the assessee had donated amounts to non-charitable entities from the Dharmada account. The CIT (A) upheld the disallowance, stating that the expenses were not of a charitable nature. However, the Tribunal disagreed, citing a Supreme Court case where earmarked amounts for charity were not considered trading receipts. The Tribunal deleted the addition of Rs. 1,451, as the mere failure to use Dharmada for charitable purposes did not make the receipt taxable.

4. Disallowance of donation debited to Bareilly branch - The Tribunal confirmed the disallowance of Rs. 11 as a donation debited to the Bareilly branch based on lower authorities' reasoning.

5. Addition of Rs. 150 - The contention regarding the addition of Rs. 150 was not pursued before the Tribunal and, therefore, was not sustained. The appeal was partly allowed, with decisions made on various issues as detailed above.