1989 (9) TMI 2

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..... year 1969-70, for which the relevant period of account is 1375 U.S. The facts found by the Tribunal, as stated in the statement of case, are as follows : The assessee was a partnership firm deriving income from business in cloth. In this appeal, we are concerned with the assessment year 1969-70, the year ended on April 13, 1969, being the relevant previous year. The head office of the assessee was at Calcutta and it had a branch at Gauhati. On January 26, 1969, the premises of the Gauhati branch were burnt during a riot. The assessee suffered loss on account of fire. The firm was dissolved on April 3, 1968. During the previous year under consideration, i.e., April 14, 1968, to April 13, 1969, the assessee was not carrying on any busines .....

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..... d posed the question as to what portion of the total receipts of Rs. 75,500 was taxable under section 41(1) in the assessment for the assessment year 1969-70 in which the amounts were received from the insurance company. The Tribunal referred to the said provision of the Act and decided the issue against the assessee. The Tribunal held : "In the case before us, the business carried on by the assessee has ceased to exist during the year under consideration in which the amounts were received from the insurance company. But, that fact is no bar to taxing the amount under section 41(1) of the Act. Again, there is no dispute that the loss of Rs. 48,346 allowed in the assessment year 1968-69 is clearly taxable during the assessment year 1969-70 .....

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..... erefore, it is to be treated as an income on revenue account. If that be so, the entire income is liable to be assessed as income of the assessee. The Tribunal has emphasised the fact that the loss of the entire stock-in-trade as claimed by the assessee was allowed as business loss. Therefore, when the said amount has been recovered, the amount is clearly liable to be taxed though the assessee has claimed and had been allowed some deduction on account of the loss in the earlier assessment year. The fire that broke out relates to the relevant previous year. Section 41(1) provides that : "41. Profits chargeable to tax.-(1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading .....

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