Law: Income Tax Ordinance, 1979

Section: 23,23(1)(x),25,25(a)

Income Tax Ordinance (XXXI of 1979)----Ss. 23(1)(x) & 25(a)---Deductions---Loss due to destruction of stock by fire---Disallowance of loss caused by fire of the insured stocks due to partial receiving of compensation from the Insurance Company Assessee contended that stocks had actually been destroyed by fire while the hope for recovery of the same from Insurance Company was not in sight and in case any compensation was received or recovery was subsequently made then the same could be offered to tax as per provisions of S.25(a) of the Income Tax Ordinance, 1979---Validity---Loss due to destruction of stock by fire was an allowable expense---Recovery of claim from Insurance Company after partial payment had apparently become not possible---In case of recovery of claim in future it could be taxed in the year of receipt under the provisions of S.25(a) of the Income Tax Ordinance, 1979---Amount of claim which had not been accepted by the Insurance Company shall be written off and in future if at all the same was recovered, wholly or partly, it shall be added in the year in which it was recovered. 1 Tax 4 ref. 1983 PTD 30 rel. ORDER The titled appeal is directed against the order, dated 1-8-2003 passed by the learned CIT/WT(A), Zone-III, Lahore by submitting various grounds but before us has mainly contested the disallowing of loss caused by fire of the insured stocks due to partial receiving of A compensation from the Insurance Company. The sections referred to in this order are of the Repealed Income Tax Ordinance, 1979. Facts in brief of the case are that the Assessing Officer during the course of assessment proceedings found that following loss of stock due to fire is claimed as an expenditure:-- -- Total value of stock lost due to fire 106583522 kgs -- Stock loss insurance claimed received from HIC1 and PITC1 40769866 -- Insurance claimed receivable from PGIL 9900000 -- Expenses claimed. 55913656 Two Insurance Companies paid the claim made by the appellant/assessee but in the case of Pakistan General Insurance claim was lodged for a sum of Rs.59.518 million out of it only Rs.9.9 million were received, and balance sum of Rs.49.618 million was written off.…

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