1991 (10) TMI 93 - AT - Income Tax

Summary

Issues:
1. Claim of trading loss related to imported polyester yarn and consignment expenses for the assessment year 1984-85.
2. Interpretation of section 48 of the Customs Act, 1962 and its implications on the claim of loss.
3. Analysis of the act of relinquishment by the assessee and its impact on the claimed loss.

Detailed Analysis:
The judgment involves a case where the assessee claimed a trading loss of Rs. 14,82,337 for the assessment year 1984-85, relating to imported polyester yarn and consignment expenses. The assessee, a limited company engaged in trading imported goods, had imported polyester yarn from Taiwan in the accounting year relevant to the assessment year 1983-84. The goods were not lifted from Customs Authorities due to the fear of heavy losses, leading the assessee to surrender the goods as per section 48 of the Customs Act, 1962. The Senior Counsel for the assessee argued that the act of relinquishment, as per the Customs Act, resulted in the loss of goods for the assessee, justifying the claimed deduction. The Revenue, represented by Shri Bansal, relied on the orders of the authorities supporting their stance.

The Tribunal carefully considered the submissions and analyzed the provisions of the Customs Act, 1962, particularly section 48, which governs the relinquishment of title to imported goods. The Tribunal noted that the act of relinquishment by the assessee did not equate to a loss of goods, as it merely transferred the right to sell the goods to the Customs Authorities. The Tribunal highlighted that the act of relinquishment did not entail a loss of the goods themselves, but rather a waiver of title, allowing the authorities to sell the goods and recover customs duty. The Tribunal emphasized that the goods had not been sold by the Customs Authorities by the end of the relevant accounting period, and the assessee had not claimed any surplus from the sale. Therefore, the Tribunal rejected the claim of loss by the assessee, deeming it baseless.

The analysis delved into the definitions of 'relinquish' and 'relinquishment' to underscore that the act of surrendering title did not amount to a loss of goods. The Tribunal also referenced sections 61, 62, and 63 of the Major Port Trusts Act, 1963, which outline the process of sale of goods by port authorities and the application of sale proceeds. The Tribunal concluded that the act of relinquishment did not result in an actual loss of goods or value to the assessee, as the goods remained unsold and the assessee had not claimed any surplus from the sale proceeds. Consequently, the Tribunal dismissed the claim of trading loss by the assessee for the assessment year in question.