9911796707
TMI Blog1988 (3) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... on the question of balancing charge under 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 ITO 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 SY 2034 (12th Nov., 1977 to 30th Oct., 1978). 3. The facts in brief are: Originally the assessee had purchased one derick crane for Rs. 1,80,000 on 8th Nov., 1974. The said crane was insured for Rs. 3,00,000. The said crane was put to use at Porbandar near the sea. On 22nd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 s. 2(47) of the IT 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 s. 45 r/w s. 2(47) of the Act, were clearly applicable in the assessee's case. Since the assessee had spent Rs. 1,30,148 (Rs. 80,200+Rs. 49,948) on the repairs of the cran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner(A), 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(A) 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 and highlighted the fact that in that case, the point at issue was whether the surplus received by the assessee was taxable under 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 deducting the expenditure on repairs of damaged plant and machinery from the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urance Company had taken 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 (A) 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(A) has been mislead by the decision reported in CIT vs. Sirpur Paper Mills Ltd. (1978) CTR (SC) 11 : (1978) 112 ITR 776 (SC). 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 s. 41(2) of the Act. It is interesting to note that in the said de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gains arising 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(A) this aspect of the matter has been raised by the assessee. On the contrary, the penultimate paragraph o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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