Rl. Khatri, A.M. - (1.) THIS appeal, filed by the assessee, is directed against the order of Commissioner (Appeals), Udaipur, for assessment year 1979-80. The appellant agitated various grounds which are being discussed and decided hereunder.
(2.) Ground Nos. 1(i)(a) to (h) : Gr. Nos.1 (i)(a) to (g) are not pressed and hence these are being dismissed. The COD has acorded permission only for raising ground No. (h). Ground No. 1(i)(h)-Upholding the addition of Rs. 5,98,458 in respect of fixed assets claims received. The Commissioner (Appeals) has discussed this ground at p. 5 of the order. Before the Commissioner (Appeals) it was submitted that the insurance claim should have been reduced from the cost of the assets and the WDV should have been adjusted. It was ;urther admitted by the Authorised Representative that the WDV cost of the assets was not known. On the basis of the details filed by the appellant the assessing officer has computed the income chargeable under section 41(2) of the Act and the appellant had not filed any details to show that the computation was incorrect. As such the addition on this count was sustained by Commissioner (Appeals).
(3.) THE learned Authorised Representative submitted that the assessing officer had computed income chargeable under section 41(2) of the Income Tax Act, 1961, at Rs. 5,98,458 (p. 3, para 10) which includes a sum of Rs. 5,89,055. THE letter sum pertains to profit on account of recqvery from insurance companies on the claim of machinery lost through fire. It was submitted that the views taken by both the lower authorities are erroneous. THE issue is purely legal. It is a well-established principle, upheld by the Honble Supreme Court, that no transfer is involved in the destruction of an asset through fire. A transfer ensues essentially through an inter Wvos arrangement. Any force majoure catastrophe, therefore, cannot be loosely labelled a transfer. THE learned Authorised Representative relied upon the judgment of the Honble Supreme Court in the case of Vania Silk Mills (P) ITD. v. CIT (1991) 98 CTR (SC) 153: (1991) 191 ITR 647 (SC). Section 41(2), which deals with the matter, refers to an eventuality arising when an asset is sold, discarded, demolished, or destroyed. THE appellant's case cannot, by any thread of thought, be said to fall under the first three terms. As for the fourth, that is "destroyed", the same must occur consequent to an act or application on the part of the assessee. THE Delhi Bench of Tribunal has noted this aspect in Anil Kumar Bishnoi v. LAC (1991) 39 ITD 413 (Del). THErefore, the addition under section 41(2) is erroneous, untenable and should be directed to be deleted.;