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Issues:
Disallowance of deduction for loss claimed by the assessee. Analysis: The appeal by the assessee was against the order of CIT(A) confirming the disallowance of the claim for deduction of loss amounting to Rs. 61,923 for the assessment year 1990-91. The case involved the assessee, a transporter, who was a sub-contractor for transporting diesel from Kandla to Udaipur. The diesel, carried in the assessee's tanker, was lost in an accident, leading to a claim by M/s HPCL against M/s ATC, who in turn claimed the amount from the assessee. The AO disallowed the claim, which was upheld by the CIT(A). The Tribunal considered the arguments presented by both sides. The assessee contended that there was an oral contract with M/s ATC for transportation, and the loss occurred due to the accident. The authorized representative highlighted the financial transactions and correspondence supporting the claim. On the other hand, the Departmental Representative alleged collusion and questioned the existence of the accident, claiming the loss calculation was based on an unrealistic diesel rate. The Tribunal noted the absence of detailed investigation into the accident but emphasized that the authorities did not dispute the occurrence of the accident or loss. Upon reviewing the record and contentions, the Tribunal found that the loss to the assessee accrued when M/s ATC demanded reimbursement. The documentary evidence, including letters and financial adjustments, supported the assessee's claim. Despite the lack of a written agreement detailing the contract terms, the Tribunal held the assessee liable for the loss as the carrier of goods. Considering the mercantile system of accounting followed by the assessee, the Tribunal allowed the claim and deleted the disallowance, ruling in favor of the assessee. In conclusion, the Tribunal allowed the appeal of the assessee, overturning the disallowance of the deduction claimed for the loss.
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