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TMI Blog1988 (3) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... in deleting the same on the ratio of 112 ITR 776 (SC) which is on the question of balancing charge u/s 41(2) and not on the issue of capital gain on the total loss of an asset. 3. On the facts and in the circumstances of the case, the learned CIT (A) ought to have upheld the order of the ITO. 4. It is, therefore, prayed that the order of the learned CIT (A) may be set aside and that of the Income-tax Officer may be restored to the above extent. " 2. The assessee is a firm. The assessment year is 1979-80 and the relevant previous year is S.Y. 2034 (12-11-1977 to 30-10-1978). 3. The facts in brief are : Originally the assessee had purchased one derick crane for Rs. 1,80,000 on 8-11-1974. The said crane was insured for Rs. 3,00,000. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of the derick crane. The crane was destroyed due to its throwing away in sea on account of heavy cyclone and could not be recovered and we received insurance claim for the same. The capital gain is leviable if there is a transfer of capital assets. This case is not covered by the definition of the word 'transfer' as defined in sec. 2(47) of the Income-tax Act, 1961 and as such there is no capital gain arising out of destruction of aforesaid capital asset. The difference between the cost and insurance money is our capital receipt only. " 5. While framing the assessment, the ITO was of the view that the provisions of section 45 read with section 2(47) of the Act, were clearly applicable in the assessee's case. Since the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The addition is deleted. " 7. Being aggrieved by the order of the Commissioner (Appeals), the revenue has come up in appeal before the Tribunal. The learned representative for the department strongly relied on the order of the ITO and vehemently argued that the Commissioner (Appeals) was not justified in accepting the assessee's contention in the manner he did. Thereafter, he invited our attention to the aforesaid decision of the Hon'ble Supreme Court had highlighted the fact that in that case, the point at issue was whether the surplus received by the assessee was taxable u/s 41(2) of the Act. Further, in that case, only a part of the plant and machinery was damaged by fire and the assessee received insurance claim thereon. After deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the salvaged material, while in the instant case, the crane is still lying under the sea. He, therefore, urged that we should uphold the order of the Commissioner (Appeals) on this point. 9. We have carefully considered the rival submissions of the parties and we find considerable force in the submissions made on behalf of the revenue. At the outset, we would like to mention that the Commissioner (Appeals) has been misled by the decision in Sirpur Paper Mills Ltd.'s case. We make this observation as in that case, the Hon'ble Supreme Court was called upon to decide the issue vis-a-vis the provisions of section 41(2) of the Act. It is interesting to note that in the said decision it was not in dispute that the insurance money received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the transaction was a long-term capital gain or a short-term capital gain. The learned representative for the department had objected for sending the matter back on this issue in view of the fact that the assessee had neither filed an appeal or cross objection raising this issue. The learned counsel for the assessee has stated that since the assessee had won on the main issue, it could not have preferred appeal/cross objection for the determination of the capital gains whether it is long-term or short-term. 11. We are constrained to observe that neither in the order of the ITO nor in the order of the Commissioner (Appeals) this aspect of the matter has been raised by the assessee. On the contrary, the penultimate paragraph of the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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