9911796707
TMI Blog1993 (11) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... fall within the meaning of s. 41(2). The Assessing Officer, however, rejected the assessee's contention and brought the amount to charge under s. 41(2). 2. In appeal, the assessee also did not meet with success when the learned CIT(A) rejected the contention of the assessee that the ratio of Madras High Court in the case of Kasturi Sons vs. CIT (1984) 42 CTR (Mad) 297 : (1985) 152 ITR 541 (Mad) squarely applicable on the fats and in the circumstances of the case. The learned CIT(A) noted that the facts of the assessee's case were distinct from those prevailing in the case of Kasturi Sons. The learned CIT(A) noted that the assessee's furniture had got gutted in the fire and its claim was settled by insurance company by paying in cash while in the case of Kasturi Sons such claim was settled by specie, i.e., when the destroyed ai-craft was replaced by another aircraft by the insurance company and the Hon'ble Madras High Court in Kasturi Sons held that the provisions under s. 41(2) are not attracted. The learned CIT(A) noted that even though the assessee's claim for insurance with regard to furniture gutted in the fire was under the reinstatement policy yet the assessee had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that while the assessee was paid cash by the Insurance Company in settlement of its claim of items gutted, in the case of Kasturi Sons the destroyed items i.e., the aircraft was replaced by another aircraft. The fact, however, is that the money paid by the insurance company to the assessee was under the reinstatement policy as the assets in question were insured for reinstatement value. There is no dispute that the amounts paid by the insurance company were actually utilised for reinstating the gutted items. The mere fact, therefore, that the assessee was paid cash would not adversely affect the assessee's claim that the provisions of s. 41(2) are not attracted looking to the relevant facts and the circumstances of the case. In our view, the ratio of Hon'ble Madras High Court in the case of Kasturi Sons is fully applicable on the facts and in the circumstances of the case. We may also fruitfully refer to the order of the Tribunal, Cochin Bench in Highland Produce Co. Ltd. vs. ITO (1993) 47 TTJ (Coch) 13 : (1993) 45 ITD 488 (Coch) wherein it has been held that where the reinstatement clause has been invoked what the insurer pays to the assessee is only reinstatement value of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been reversed by the Hon'ble Supreme Court in the case of Vania Silk Mills vs. CIT (1991) 97 CTR (SC) 257 : (1991) 191 ITR 647 (SC) wherein the judgment of the Allahabad High Court relied upon by the CIT(A) in the case of J.K. Cotton Spinning Mills, has been overruled. 8. The learned Departmental Representative submitted that the facts involved in the case are distinct from the ratio in the case of Vania Silk Mills. She submitted that in the case of the assessee, it continued to have right in the assets, inasmuch as, even the destroyed assets were taken over by the insurance company thus involving transfer within the meaning of s. 2(47) of the Act. The learned Departmental Representative also invites our attention to the ratio of Hon'ble Calcutta High Court judgment in the case of Marybong Kyel Tea Estates Ltd. vs. CIT (1981) 129 ITR 661 (Cal). In reply, Shri Vohra submitted that the assets in question were not taken over by the insurance company but only their value adjusted against the insurance claim settled by the insurance company. He submitted that such assets continued to be with the assessee and the insurance company did not take over such assets. Shri Vohra has invit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties. We have also gone through the details of the expenditure claimed. A perusal of relevant details reveals that the expenditure is towards replacement of existing floors, roofing and plastering of walls. The expenditure in our view does not constitute capital expenditure. The expenditure incurred is towards relaying of floors and roof so as to restore the same to their original condition. In the circumstances, we hold the same as revenue. This ground of appeal is accordingly allowed. 13. The next grievance of the assessee is that the learned CIT(A) erred in disallowing foreign travel expenses amounting to Rs. 17,201 holding it to be capital in nature. The Assessing Officer disallowed this claim of the assessee on the ground that the amount stood spent in preparation of the feasibility report for setting up of a project inIndonesia. The disallowance was upheld by the learned CIT(A). Shri Vohra submitted that the assessee is already in the business of manufacture of Automotive filter. To study the possibility of setting up a plant for manufacturing automotive filter inIndonesia(sic) was undertaken by the assessee which also involved foreign travel on which the assessee incu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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