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TMI Blog2007 (8) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... was delivered by M.M. KUMAR, J. - This order shall dispose of I.T.A. Nos. 31 and 32 of 2004 as both the appeals emerge from one composite order passed in respect of Assessment Year 1990-91 and 1992-93. These appeals by the assessee filed under Section 260A of the Income Tax Act, 1961 (for brevity, 'the Act'), challenge order dated 26.6.2003 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (for brevity, 'the Tribunal'), in I.T.A. No. 1424/Chandi/95, in respect of the assessment year 1990-91 and I.T.A. No. 1425/Chandi/95, in respect of the assessment year 1992-93 (A-3). The assessee has claimed that following three questions of law would arise for our determination:- "(i) Whether in the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit rate for the years under consideration has fallen by more than 6 per cent. On the asking of the Assessing Officer, the assessee submitted that at the beginning of the manufacturing season there was theft at its factory premises on the night of 17/18.9.1989, which resulted into loss of woolen rags etc. valued at Rs. 51,02,069/-, which in turn resulted into fall in the gross profit rate. The Assessing Officer did not feel convinced with the explanation furnished and made addition of Rs. 12 lacs on account of low G.P. rate in comparison to the G.P. rate of the last year on estimate basis. The assessee had also shown a sum of Rs. 51,02,069/- as the claim receivable in an annexure to the balance sheet under the head 'current assets loans a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash available with the assessee. According to the Commissioner Income Tax (Appeals), the Assessing Officer had misdirected himself. It was concluded that the assessee had not written off the loss caused by theft and that the claim thereof was receivable. It was emphasised that the transaction had become transaction of writing off a bad debt as per the provisions of Section 36(2) of the Act with effect from 1.4.1989. Such a bad debt can be considered to be written off by the assessee. The Commissioner Income Tax (Appeals) also held that the order passed by the Assessing Officer in this respect contravened the provisions of Section 36(2) of the Act. 5. On further appeal of the revenue, the Tribunal concluded by referring to the voluminous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we do not know whether such addition was made only on account of goods manufactured and sold or in respect of the entire receipts of Rs. 3.35 crores, we are unable to correctly work out the G.P rate accepted by the Assessing Officer by including the agreed addition of Rs. 12 lacs. Thus, we are of the opinion that the G.P. rate by including the addition of Rs. 12 lacs on account of goods manufactured and sold, required to be recomputed and addition on account of undisclosed sales of goods manufactured out of the stock of Rs. 51,02,069 also requires to be computed at the same G.P. rate as applied on the disclosed sales. In the light of these facts, we consider it fair and reasonable to set aside the order of the Commissioner Income Tax (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and consequent deduction for the same in the assessment year 92-93 and accordingly it is held that the assessee is not entitled to claim deduction/allowance in respect of Rs. 1,02,069 as loss debited in the P L account as insurance claim rejected. Accordingly, issue no. (iii) is decided in favour of the revenue and against the assessee. 5.32. As a result of our findings on issues No. (iii) given herein above in this order, the respective grounds of appeal taken by the revenue for the asstt. year 92-93 in I.T.A. No. 1425/Chandi/95 are allowed." 7. We have heard learned counsel for the assessee at a considerable length and with his assistance have perused the orders passed by the Assessing Officer, Commissioner Income Tax (Appeals) and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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