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TMI Blog1963 (10) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... lsi Ram Karam Chand of Amritsar, dealing in cloth and the relevant accounting year ended on the 7th of July, 1948. The Textile Control Officer at Amritsar issued a permit to the firm about the middle of 1947 for the supply of 250 bales of cloth to the Assistant Controller at Jammu. The assessee firm placed an order with its commission agents at Ahmedabad for 176 bales of cloth to be consigned by rail to the Textile Commissioner at Jammu Tavi Station. The firm of the commission agents at Ahmedabad called M/s. Tulsi Ram Kanahaya Lal despatched 176 bales by rail, the consignment being made to Self . The goods were sent under a railway receipt at railway risk. The railway receipt along with the invoice was sent to the assessee firm at Amritsar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, 1948, for the value of the lost goods. In that suit a compromise was reached on the 18th of June, 1951, under the terms of which the Ahmedabad firm received a sum of ₹ 1,24,586 in settlement of its claim. The Ahmedabad firm credited this amount to the account of the assessee firm in due course and the assessee firm in its account debited the Ahmedabad firm. It is stated that this amount was treated as a taxable receipt in the relevant assessment year. The question which arose was whether the cost of the goods, ₹ 1,74,827, should have been shown as a loss in the assessment year 1949- 50, and the subsequent amount recovered from the Government of India shown as a profit in the relevant assessment year 1952-53, or whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een October, 1939, and October, 1940, the loss being detected in May, 1941. In that year the matter was compromised and the employee paid the firm ₹ 16,250 and the firm, accordingly, claimed a loss of the balance of ₹ 21,000 as a loss in the assessment year 1942-43, which was the year in which the loss was definitely ascertained and the settlement made. In that case it was the Commissioner who was contending that the loss ought to have been claimed in the year in which it occurred instead of in the year in which the settlement was reached. The learned judges quite rightly decided that the loss was properly claimed in the assessment year 1942-43, observing, Loss implies that it is an amount which is gone for ever and it is im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of India and Pakistan in matters of this kind. In fact I may venture the opinion that in the light of subsequent decisions it is doubtful whether anything would have ever been recovered from the Government of India if the compromise had not been reached in 1951. The learned Accountant Member seems to me to have summed up the position correctly when he observed, on the last day of the account year goods which cost ₹ 1,74,827 were not in the closing stock nor was there an admitted liability of any person in respect of either the cost price or the sale price of such goods. According to every known method of accounting, the fictitious debit of ₹ 1,74,827 in the goods account had necessarily to be transferred to the profit and lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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