Law: Illegal Dispossession Act, 2005

Section: 10

Income-tax Act, 1922 -- Section 10 -- Loss of stock in trade by fire -- Allowable -- Fire risk incidental to trade -- Not confined to commodities liable to catch fire by spontaneous combustion -- Loss of stock in trade by fire -- Allowable -- Fire risk incidental to trade -- Not confined to commodities liable to catch fire by spontaneous combustion -- ORDER The judgment was delivered by Sayed Ali Khan, President.- The only objection raised in this appeal concerns the disallowance of a sum of Rs. 18,500 claimed as loss on account of destruction of stock-in-trade due to fire that broke out in the assessee's godown. The Income-tax Officer disallowed the claim on the ground that there was "no proof whatsoever of the destruction of any stock." He further opined that since the assessee did not maintain any day-to-day stock account, he could not show that "there was any reduction in the stock due to the allegged loss by fire." 2. On appeal the Appellate Assistant Commissioner thought that although the Income-tax Officer's arguments may not be sound, the loss was "clearly inadmissible". In this opinion it could not be said that "breaking out of fire was incidental to tent-manufacturing business" and that it was "pure and simple accident which any person doing business in tent-manufacturing never takes into account as an event of likely or expected occurrence." It may be said to his credit that he did not leave unnoticed case of Motamal lethumal v. Commissioner of Income-tax Bihar and Orissa(15 I T R 155) but he proceeded to distinguish the facts of that case and, in particular relied on the following observation of Meredith, J. "To my mind, whether fire is a risk incidental to a business must to some extent depend on the natures of the business; but I have no doubt that fire is a risk incidently to any business dealing in inflammable and, I think, grain is sufficiently inflammable to justify the view that it is a risk incidental to a grain business. Cases are not unknown where grain heats up specially in holds of ships and catches fire by spontaneous combustion" The Appellate Assistant Commissioner points out that "it shall be absurd to say that raw materials needed in…

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