Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business loss/deductions - Year in which deductible - Assessment year 1983-84 - Assessee was carrying on business of running a solvent plant - In 1978, goods of assessee stored in godown of PSWC was destroyed on account of a fire - Assessee did not claim loss on account of fire in assessment year 1978-79 and filed a civil suit against PSWC and insurance company seeking reimbursement of such loss - Said civil suit was, however, dismissed on 31-5-1982 and thereafter assessee filed a revised return of income for assessment year in question claiming set off on account of said loss of goods in fire - Claim was rejected by Assessing Officer on ground that loss had taken place during financial year 1977-78 and, therefore, same could not be allowed in assessment year in question - Whether since assessee, in spite of fire which destroyed its stock, did not accept same as his loss till dismissal of civil suit on 31-5-1982 and it was only thereafter that it acknowledged that it had incurred said loss, loss must be accepted to have been incurred during financial year 1982-83, and should be allowed as deduction in relevant assessment year - Held, yes FACTS The assessee was carrying on the business of running a solvent plant. In 1978, the goods of the assessee stored in the godowns of the PSWC was destroyed on account of a fire. It, however, did not claim loss on account of fire in the assessment year 1978-79 and filed a civil suit against the PSWC and insurance company seeking reimbursement of the cost of goods. The civil suit was dismissed on 31-5-1982 and thereafter the assessee filed a revised return for the assessment year 1983-84 claiming set off on account of loss of goods on account of fire. The claim was rejected by the Assessing Officer on the ground that the loss having taken place during the financial year 1977-78, could not be set off as loss in the relevant assessment year. The Tribunal upheld the disallowance. On reference : HELD It was not a matter of dispute that despite the destruction of the stock/goods during the financial year 1977-78 (assessment year 1978-79), the assessee consistently had been showing those…

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