KARAM CHAND THAPPAR AND BROS Vs. COMMISSIONER OF INCOME TAX
LAWS(CAL)-1963-6-12
HIGH COURT OF CALCUTTA
Decided on June 13,1963

KARAM CHAND THAPPAR AND BROS. Appellant
VERSUS
COMMISSIONER OF INCOME-TAX Respondents


Referred Judgements :-

ALLEN V. FARQUHARSON BROTHERS AND CO. [REFERRED TO]
KSHETRA MOHAN SANNYASI CHARART SADHUKHAN VS. COMMR OF EXCESS PROFITS TAX WEST BENGAL [REFERRED TO]
LIQUIDATORS OF PURSA LIMITED VS. GOMMR OF INCOM TAX BIHAR [REFERRED TO]


JUDGEMENT

K.C.Sen, J. - (1.)This is a reference under Section 66(1) of the Income-tax Act, 1922, hereinafter described as the 'Act'. The following question arising out of the order of the Tribunal is for decision by this Court:
"Whether on the facts and in the circumstances of the case a sum of Rs. 47,404 representing the value of the electrical machinery looted during the communal riots in Lahore in the relevant year of account was admissible as an allowance under Section 10(2)(vii) of the Indian Income-tax Act ?"

(2.)The assessee is Messrs. Karam Chand Thapar and Brothers Private Limited, Calcutta. The assessment year is 1948-1949 and the relevant accounting year ended on the 31st March, 1948. The assessee was the Managing Agent of the Dry Ice Gas find Refrigerators Limited, Lahore. The latter sold its machinery and plant to the assessee company on the 31st July, 1947. Before this date of transfer the assessee company had purchased some electrical machinery of the value of Rs. 47,404 for production of dry iee and carbon dioxide gas, It is stated in the statement of the case by the appellate tribunal that the assessee company started working the dry ice factory on and from the 1st August, 1947. Communal riots broke out in Lahore and on the 14th August, 1947 the assessee company's factory at Lahore was raided by a mob and there was loot and arson. The assessee claimed that the electric machinery worth Rs. 47,404 was lost by destruction and, therefore, a claim of deduction in respect of the value of the machinery (Rs. 47,404) under Section 10(2)(vii) of the Act was made.
(3.)The Income-tax Officer who completed the assessment did not allow the claim for loss treating it as one of capital nature and on appeal by the assessee the Appellate Assistant Commissioner confirmed the order passed by the Income tax Officer. Thereafter the assessee preferred an appeal before the Income-tax Appellate Tribunal. After the case was heard in part by the Tribunal, it remanded the case to the Income-tax Officer by its order, dated 30th April 1958 to find out the facts bearing upon the claim of the assessee and in particular, (1) whether the assessee carried on the business in the year of account; (2) what the date of destruction was; (3) what was the written down value of the assets and (4) whether the amount of Rs. 47,404 could be written off under Section 10(2)(vii). The Income-tax Officer in due course made investigation and sent his findings to the Tribunal. Thereafter it reheard the case and by its order, dated 19th March, 1959 upheld the disallowance in respect of Rs. 47,404 claimed under Section 10 (2) (vii) of the Indian Income Tax Act. The Tribunal held that from 31st July 1947 when the plant and machinery of the Dry Ice factory was purchased by the assessee to 14th August 1947, when the communal riot broke out in Lahore, there was no production of dry ice and the sale price of carbon dioxide gas amounted to Rs. 4,383-10-0. The assessee failed to produce the relevant acceunt books and to prove that the quanttity of gas sold had been manufactured in the factory during the short period of 14 days from 31st July 1947 to 14th August 1947. According to the Tribunal the assessee also failed to prove that there was production of gas during this very short period of 14 days and, as such, it came to the conclusion that the machinery in dispute was not used in the business during the year of account


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