9911796707
TMI Blog2002 (9) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer framed the assessment determining the business loss at Rs. 86,86,547. The Commissioner of Income-tax while going through the assessment record found that a sum of Rs. 4.87 crores received by the assessee from the insurance company had been allowed by the Income-tax Officer without proper scrutiny and verification, as a capital receipt not subject to tax even though that sum had been accounted for by the assessee in its profit and loss account as an item of revenue. The Commissioner, therefore, initiated action under section 263 of the Income-tax Act. The assessee in its reply submitted to the Commissioner stated that there was a severe cyclone in Madras on November 11 and 12, 1984, and that as a consequence the assessee's factory was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny aggrieved by that order of the Commissioner appealed to the Tribunal which declined to interfere with the order. Learned counsel for the assessee submitted before us that the amount received by the assessee for the damage caused to its machineries, which machineries were still usable and were in fact being used, was a capital receipt and that, that capital receipt fell outside the scope of section 41(2) of the Income-tax Act. Reliance was placed by counsel on the decision of the apex court in the case of Vania Silk Mills P. Ltd. v. CIT [1991] 191 ITR 647. That decision was considered by a larger Bench of the apex court in the case of CIT v. Mrs. Grace Collis [2001] 248 ITR 323. At page 330 of the report, the court after referring to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all show any application of mind by the Assessing Officer to this receipt of Rs. 4.87 crores from the insurer. This amount is not even referred to in the order of assessment. The reference is only to an adjustment statement. That adjustment statement is not annexed to the assessment order. It is a statement filed by the assessee which has been implicitly accepted by the Assessing Officer. As to whether this receipt should be treated as taxable income in the hands of the assessee or excluded altogether from the computation on the ground that it is a capital receipt which did not have the character of a capital gain, is not anywhere discussed. Admittedly, the assessee had treated this amount as income in its profit and loss account and on it ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
