M/s Sureka International, Kanpur V. Asstt. Commissioner of Income Tax, Kanpur

ITA 3/LKW/2014

• Counselvise Citation: 323714 RSA 2014
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-04-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: PRADEEP SETH F
• Keywords: Principle of natural justice

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS. 2 & 3/LKW/2014 ASSESSMENT YEARS:2003 - 04 & 2004 - 05 M/S SUREKA INTERNATIONAL, 35, JHAJHARIA MARKET, 49/29, GENERAL GANJ, KANPUR. PAN:AAFFS3605L VS. A.C.I.T., CENTRAL CIRCLE - 1, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI PRADEEP SETH, F.C.A. RESPONDENT BY SHRI ALOK MITRA, D.R. DATE OF HEARING 10/04/2014 DATE OF PRONOUNCEMENT 1 3 /05/2014 O R D E R PER A. K. GARODIA, A.M. BOTH THESE APPEALS ARE FILED BY THE ASSESSEE, WHICH ARE DIRECTED AGAINST THE COMBINED ORDER PASSED BY LEARNED CIT (A) - I, KANPUR DATED 24/10/2013 FOR ASSESSMENT YEARS 2003 - 2004 AND 2004 - 05. 2. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT I.T.A. NO.3/LKW/2014 FOR ASSESSMENT YEAR 2004 - 05 IS NOT PRESSED AND ACCORDINGLY THIS APPEAL IS DISMISSED AS NOT PRESSED. 3. GROUND S OF APPEAL RAISED BY THE ASSESSEE IN I.T.A. NO.2/LKW/2014 FOR ASS ESSMENT YEAR 2003 - 04 ARE AS UNDER: 1. THAT THE LEARNED C.I.T.(APPEALS) HAS ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE LOSS OF RS.17,62,416/ - CLAIMED BY THE ASSESSEE ON ACCOUNT OF LOSS OF STOCK IN FIRE ON THE GROUND THAT IT IS A CAPITAL LOSS AND NOT A REVENUE LOSS. 2 2. THAT THE LEARNED C.I.T.(APPEALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN REJECTING THE CLAIM OF TRADING LOSS AS ABOVE AS A CAPITAL LOSS WHILE ACCEPTING IN PARA 4.2.5 OF THE APPELLATE ORDER THAT THE RAW MATERIAL HELD BY THE ASSESSEE IN ST OCK IS HELD BY IT FOR THE PURPOSE OF ITS BUSINESS AND IN PARA 4.2.6 ACCEPTING THAT LOSS OF STOCK IN TRADE IS CERTAINLY AN ADMISSIBLE DEDUCTION IN COMPUTING THE PROFITS. 3. THAT THE LEARNED C.I.T. (APPEALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN MISINTER PRETING THE JUDGMENT OF THE APEX COURT IN THE CASE OF BADRI DAS DAGA VS. C.I.T. 34 ITR PAGE 10 AND IN ADOPTING A VERY NARROW MEANING OF THE TERM 'INCIDENTAL TO BUSINESS'. 4. THAT THE LEARNED C.I.T. (APPEALS) HAS FAILED TO NOTICE THE JUDGMENT OF THE HON'BL E PATNA HIGH COURT IN THE CASE OF MOTAMAL JETHUMAL VS. C.I.T. REPORTED IN 15 ITR PAGE 155 WHICH IS A DIRECT AUTHORITY ON THE ISSUE INVOLVED IN APPEAL. 5. THAT THE LEARNED C.I.T. (APPEALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN NOT APPLYING THE PRINCIPLE LAID DOWN BY THE VARIOUS COURTS THOUGH REFERRING TO THE SAME IN PARA 4.2.6 OF THE APPELLATE ORDER. 6. THAT THE APPELLATE ORDER IS ARBITRARY, UNJUST, EXCESSIVE, BAD IN LAW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 4. THE LEARNED A.R. OF THE ASSES SEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE PATNA HIGH COURT RENDERED IN THE CASE OF MOTAMAL JETHUMAL VS COMMISSIONER OF INCOME - TAX [1947] 15 ITR 155 (PAT) . HE FURTHER SUBMITTED THAT THE COPY OF THE JUDGMENT IS AVAILABLE ON PAGES 27 TO 32 OF THE PAPER BOOK. 5. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE DECISION OF LEARNED CIT(A) IS ON THE BASIS THAT THE LOSS OF STOCK - IN - TRADE IS REVENUE LOSS ONLY WHEN IT OCCURS BY A CAUSE USUAL IN THE COURSE OF BUSINESS AND IS BY ITS 3 NATURE INCIDENTAL TO THE CAR RYING ON OF THE BUSINESS. HE HAS HELD THAT THE BREAK OUT OF THE FIRE WAS AN UNFORTUNATE ACCIDENT NOT ATTRIBUTABLE TO ANY OPERATIONS CARRIED ON DURING TRADE/BUSINESS AND THEREFORE, THIS IS NOT REVENUE LOSS. AS PER THE JUDGMENT OF HON'BLE PATNA HIGH COURT RENDERED IN THE CASE OF MOTAMAL JETHAMAL (SUPRA), LOSS OF STOCK - IN - TRADE DUE TO FI R E IS A TRADING LOSS AND THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION OF THE VALUE OF THE GOODS DESTROYED BY FIRE. IN THAT CASE ALSO, THE CLAIM OF THE ASSESSEE REGARDING LOSS OF STOCK - IN - TRADE IN FIRE WAS DISALLOWED BY THE ASSESSING OFFICER ON THE BASIS THAT IT IS A CAPITAL LOSS. HENCE, WE FIND THAT THIS JUDGMENT OF HON'BLE PATNA HIGH COURT IS SQUARELY APPLICABLE IN THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE SAME, WE DEC IDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND WE HOLD THAT THE LOSS OF RS.17,62,116/ - CLAIMED BY THE ASSESSEE ON ACCOUNT OF LOSS OF STOCK IN FIR IS ALLOWABLE AS REVENUE LOSS. 7. IN THE COMBINED RESULT, THE APPEAL FOR ASSESSMENT YEAR 2003 - 04 IS ALLOWED AN D APPEAL FOR ASSESSMENT YEAR 2004 - 05 IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 /05/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR