RAGHUVANSHI MILLS LIMITED BOMBAY Vs. COMMISSIONER OF INCOME TAX BOMBAY CITY

JUDGEMENT

(1.) This is an appeal from the High Court at Bombay in an Income-tax Reference under S. 66(1), Income-tax Act of 1922.

(2.) The appellant-assessee is a Company known as the Raghuvanshi Mills Ltd., of Bombay. The assessment year with which we are concerned is 1945-46. The assessee had insured its buildings, plant and machinery with various insurance companies and also took out, besides those policies, four policies of a type known as a "Consequential Loss Policy." This kind of policy insures against loss of profit, standing charges and agency commission. The total insured against under the latter heads was

(3.) Before we set out the question referred, it will be necessary to state that the whole of this Rs. 14,00,000 has been treated as paid on account of loss of profits. The learned solicitor-General, who appeared for the appellant-assessee, contended that that was wrong because the portion of it assignable to Standing Charges and Agency Commission could not on any construction be liable to tax.