M/S. Singhal Paints Pvt.Ltd.,, Lucknow vs Department Of Income Tax

Income Tax Officer -VI(I), Vs M/s Singhal Paints Pvt. Ltd., Lucknow. 1, Aishbagh, Lucknow. PAN:AADCS4087R (Appellant) (Respondent)

Appellant by Shri K. C. Meena, D. R. Respondent by Shri H. P. Singh, Advocate Date of hearing 09/12/2014 Date of pronouncement 23/01/2015

ORDER

PER A. K. GARODIA, A.M.

This is Revenue's appeal directed against the order passed by learned CIT(A)-II, Lucknow dated 30/04/2012 for the assessment year 2009-2010.

2. In this appeal, the Revenue has raised the following grounds:

"1. The CIT(A) has erred in law and on facts of the case in allowing loss due to the fire in excess of the loss estimated by the insurance company of Rs.59,06,413/- even though the assessee could not produce any evidence of the same."

3. Learned D.R. of the Revenue supported the assessment order. He also submitted that copy of letter received from National Insurance Company Ltd. regarding settlement of claim is available on page No. 42 of the paper book. He also submitted that final survey report of National Insurance Company Ltd. dated 05/07/2008 is available on record and it was pointed out that the loss was assessed at Rs.60,76,419/- and thereafter, the claim was averaged out 2

because the assessee was having insurance of Rs. One crore only and the stock was of Rs.156.75 lacs and therefore, liability of insurance was reduced to Rs.30,96,054/-. He submitted that when actual loss was Rs.60,76,419/- as per the survey report, how more loss can be allowed in income-tax proceedings. He further submitted that the order of CIT(A) is without considering this report and therefore, his order is not sustainable.

4. Learned A.R. of the assessee supported the order of learned CIT(A).

5. We have considered the rival submissions. We find that it is noted by CIT(A) in Para 7 of his order that loss of Rs.94,23,723/- was suffered by the assessee and the claim finalized by the insurance company was Rs.35,17,310/-. He further noted that the assessee is therefore entitled to claim the balance of loss of Rs.59,06,413/- in the present year and the same is allowable. Hence, it is seen that the report of the surveyor of the insurance company was not at all considered by the CIT(A). Even as per letter dated 07/12/2011, the considered loss was Rs.64,48,991/- out of which the insurance company has settled the claim at Rs.35,17,310/- and therefore, the difference of these two amounts only can be an allowable deduction. As per the report of the surveyor of the insurance company dated 05/07/2008, it is seen that net assessed loss was worked out by surveyor of the insurance company at Rs.60,76,419/-. In para 11.05.05 of the survey report, it is reported that the assessee has claimed the value of loss of goods in process at Rs.69.38 lacs but as per assessee's own letter dated 07/11/2007, total stock of goods in process was only of Rs.60,83,865/-. It is further noted in the same para that while working out this amount of WIP, the assessee has assumed manufacturing expenses @20% while the expenses for the current year as per their own admission are only 5.8% and therefore, this figure of Rs.60.83 lacs is excessive and same was scaled down to Rs.52,20,080/-. Since the order of CIT(A) is without considering the report of the surveyor of the insurance company, we feel that the order of CIT(A) is not sustainable.

3 Hence, we set aside his order and restore the matter back to his file for fresh decision after considering the report of the surveyor of the insurance company. Accordingly, we set aside the order of CIT(A) and restore the matter back to his file for deciding afresh after providing reasonable opportunity of being heard to both sides.

6. In the result, the appeal of the Revenue stands allowed for statistical purposes.

(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:23/01/2015. *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