9911796707
TMI Blog2010 (5) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the order of the Ld. CIT(A) may be cancelled and that of the Assessing Officer may be restored to the above effect. 2 At the outset , none appeared on behalf of the assessee and the Bench decided to dispose of the appeal after hearing the learned Departmental Representative. 3 Facts, in brief , as per relevant orders are that return declaring loss of ₹ 43,89,930/-filed on 30.11.2003 by the assessee, engaged in trading of cars besides having workshop for repairs , after being processed u/s 143(1) of the Income-tax Act ,1961[hereinafter referred to as the Act ] was taken up for scrutiny with the issue of not ice u/s 143(2) of the Act on 25.11.2004. During the course of assessment proceedings, the Assessing Officer[AO in sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as settled only in November 2003, the assessee pointed out that they had reduced the opening stock of ₹ 1,24,88,900/- as on 1.4.2003 by crediting insurance claim of ₹ 66,35,770/- and therefore, amount of ₹ 66,35,770/- could not be treated as income for the AY 2003-04. However, the AO rejected these contentions of the assessee while relying on the decision of the Hon'ble High Court of Madras in the case of Devi Films Pvt. Ltd. v. CIT, 75 ITR 301 and concluded that since the relevant stock in trade of cars were burnt only on 28.02.2002, trading loss, if any could be claimed in the AY 2002-03 and not in the year under consideration. The AO further relied upon decision in the case of CIT v. S.N.A.S.A. Annamalai Chettiyar 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In any case the insurance claim was only compensatory in nature and cannot constitute income. The AO did not consider allowing matching loss in view of his treatment In short, the action of the AO was sought to be reversed. 2.3 I have examined the issue in detail and also perused the assessment order. I find that on receipt of ex-gratia and waiver by the financiers the appellant passed necessary treatment in the books for the year ended 31.3.2004 wherein no cost of the damaged cars was effected. In other words, entire cost was adjusted against ex-gratia received from the insurance company and waiver granted by the financiers. In any case for the year ended 31.3.2003, the assessee has not debited any claim and hence the treatment in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exgratia of ₹ 66,35,770/ -, as a special case without precedence, as it was not otherwise covered in the policy. According to the assessee, exgratia claim was accepted only on 19.11.2003 and an amount of ₹ 60 lacs was remit ted by the insurance company directly to the Finance company M/s GMACT TCFC Finance Ltd. Till then due to pendency of their claim with insurance company as also suit filed by the assessment ire original cost of ₹ 1,24,88,980/- was reflected as closing stock as on 31.3.2003. On receipt of exgratia by the f inanciers, balance loss of ₹ 58,53,130/- is stated to have been adjusted by the assessee against waiver granted by the financiers in the period relevant to the AY 2004-05. In the light of these f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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