Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business loss/deductions - Allowable as - Assessment year 1992-93 - Assessee-company carried on fabrication activity in respect of raw materials such as M.S. angles, channels, plates, joists, etc., provided to it by its customer on jobwork basis - According to agreement between assessee and said customer, after completion of work, assessee was required to return finished materials and unused raw material and in event assessee did not return entire unused raw materials, said customer had right to purchase quantity not returned from market and debit assessee for same at specified rates - According to assessee, a substantial quantity of raw materials supplied by said customer was lost at its factory due to several thefts and, therefore, it had to incur certain amount in order to make good shortfall in quantity of raw materials required to be returned to said customer - It claimed deduction of said amount - Assessing Officer disallowed such claim holding that assessee could not conclusively prove theft of goods - On appeal, Commissioner (Appeals) decided in favour of assessee but Tribunal set aside order passed by Commissioner (Appeals) and restored order of Assessing Officer holding that theft alleged by assessee was not a genuine one - Whether in order to disbelieve assessee's claim of theft a definite finding must have been arrived at from materials on record that allegation of assessee was false; otherwise, there was no justification of discarding claim on ground that allegation was not conclusively proved - Held, yes - Whether when no contrary materials had been placed to justify finding that allegation of theft was a concocted one, fact, that police could not recover goods or that guilty persons were not punished, could not go against claim of assessee - Held, yes - Whether therefore, assessee was entitled to deduction of aforesaid amount - Held, yes FACTS The assessee-company carried on the business of fabrication of iron and steel structurals. It carried on the fabrication activity in respect of raw materials such as M.S. Angles, channels, plates, joists, etc., provided to it by its customer on jobwork basis.…

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