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TMI Blog2008 (1) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... 775 was written off by the assessee as bad debts during the year under appeal before us. The Assessing Officer was not satisfied with the explanation of the assessee, therefore, she came to the conclusion that there were no bad debts at all. The Assessing Officer went further and observed that these amounts could have been claimed by the assessee as trading loss for the year ending with 31-3-1996 and not for the period relevant to the assessment year 2003-04 which is under appeal before us. 3. On appeal to the ld. CIT(A), it is contended on behalf of the assessee that the writing off is necessitated upon failure of the foreign buyer. It was further argued by the assessee before the ld. CIT(A) that when the goods were sold on C F terms and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. CIT [1972] 86 ITR 417 which is specifically on CIF contracts and the assessee relied totally on this decision. Further, the Id. CIT(A) found that there is no evidence on the side of the assessee to show what legal steps were taken against the buyer or its bank to recover its money. Therefore, the ld. CIT(A) rejected the claim of treating the same as bad debts. 4. The assessee is being necessitated to be in appeal before us. We have heard the learned counsel for the assessee and the learned Departmental Representative (D.R.) at length. Before us, the learned counsel relied on the paper book which shows the C F contract and the corresponding invoices, etc., containing 19 pages. 5. On the other hand, the learned DR strongly relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and Freight. A CIF contract is a type of contract wherein the price includes cost, insurance and freight charges. Under a CIF contract, seller is required to insure the goods, deliver them to the shipping company, arrange for affreightment and send the bill of lading and insurance policy together with invoice and a certificate of origin to a bank. The documents are usually delivered by the bank against the payment of price or against the acceptance of the bill. This method protects the seller since he continues to be the owner of the goods until the buyer pays for them and obtains the documents. The interesting point to be noted here is that the property in the goods passes to the buyer on the delivery of documents. In this case present b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy and the bill of lading are equivalent of the goods. Now this explanation is very clear that the assessee has proved satisfactorily, i.e., the whole documents he relied clearly prove the completed wholesome CIF contract and the assessee has taken honest decision as contemplated on the part of the duty of the seller. The insurance is perfectly made. All requirements of CIF contract are satisfied. Therefore, the assessee cannot be faulted with transaction. Admittedly, the goods were lost at Benapole which is within Bangladesh and outside the territories of India. As per the C F terms, the goods were sold and that the goods reached the Custom station is not at all disputed. Therefore, this CIF contract is a sale of insured goods either los ..... X X X X Extracts X X X X X X X X Extracts X X X X
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