Law: Income Tax Act, 1961

Section: 256

Income-tax---Business loss--Firm---Stock-in-trade---Seizure of stock-in-trade ---Stock ¬in-trade sold and amount deposited in Court---Criminal case against assessee---Till criminal case is decided it cannot be treated to be loss of stock-in-trade---Indian Income Tax Act, 1961. The assessee was a registered firm. On a complaint, its stock of sale seeds was seized by the Police. It did not succeed in the writ petition filed in the High Court, but the High Court directed the sale seeds to be sold by public auction and the sale amount deposited in the Court until the decision of the criminal case against the assessee. The assessee claimed deduction of a sam of Rs.81,000 as total loss of stock-in-trade. The Tribunal, on appeal by the assessee, declined the deduction as the amount was not to be treated as total loss of income of the assessee. On reference Held, that till the criminal case was decided, the amount could not be treated as loss of stock-in-trade. Hence, it depended upon the decision of the criminal case and till it was decided, deduction of the same from the assessee's income could not be allowed. The Tribunal was justified in rejecting the claim of the assessee of loss of the stock-in-trade. JUDGMENT This is a reference under section 256(2) of the Income Tax Act, 1961, made at the instance of the assessee for calling for a reference from the Tribunal and in pursuance of the directions of this Court, the following question of law was has been referred by the Tribunal for answer of this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the claim made by the assessee of loss of stock-in-trade ?" The assessee is a registered firm. The year of assessment involved is 1975-76, previous year ending on March 31, 1975. The assessee-firm filed a return of income on July 16, 1975, showing a total income of Rs.1,54,543. Nearly three years later, a revised return was filed on June 27, 1978, showing total income at Rs.73,543 and thereby reducing Rs.81,000 on account of value of stock so sal seeds. The assessee was in possession of stock of sal seeds said to have been collected on the strength of a contract with…

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