SHREE RAMA MULTI-TECH LTD.,,AHMEDABAD vs. THE DY.CIT.,CRCLE-8,, AHMEDABAD

This appeal filed by the Assessee is directed against the order of the Ld. CIT(A)-XIV, Ahmedabad dated 15.02.2014 pertaining to A.Y. 1999-2000 and following grounds have been taken: 2 . A.Y. 1999-2000 1.Ld. CIT (A) erred in law and on facts in confirming disallowance by AO of loss claimed on account of fire of Rs. 50,11,623/- against insurance claim received in this set aside proceedings. Ld. CIT (A) failed to appreciate accounting entries quantifying loss due to fire on the basis of final survey report for damage to Building, Plant/Machinery, Stocks etc. to substantiate loss claimed as directed by Hon'ble ITAT. CIT (A) ought to have accepted & allowed insurance loss claimed by the appellant. It be so held now.

Facts of the case are that assessee has shown receipt of Rs. 1,25,87,770/- on estimated basis which has been accepted by the department and in assessment order vide Para 4.1 of the order. The assessee had taken insurance cover for property damage along with stock insurance. There was a loss on account of fire which was took place at the premises of the assessee.

During the assessment proceeding, ld. A.O. noticed that claim of deduction of loss on account of fire of plant and machines against the income reflecting by the assessee as claim of insurance of Rs. 1,25,87,770/-. But claim of the assessee was rejected by the A.O. because same was not supported by evidence. And for insurance policy, assessee claimed the expenses of Rs. 50,11,623/- and as per surveyor report, the major loss of plant and machinery are in respect of Auto tube pack system which were purchased in 3 . A.Y. 1999-2000 1995 and not used till fire incident took place in April 1998. Since Filtrona Auto Pack System was not put to use between 1995 to April 1998.

In this regard, assessee was asked to substantiate facts through records of earlier years to ascertain what treatment, assessee given in books of account for these plant & machine. The appellant shown his inability to produce such evidences. Considering the block of assets scheme for depreciation, any such loss has to be given effect by deduction of WDV of such machine from the block and balance loss could be claimed from the block unless such block got exhausted/completely destroyed.

In this case, claim of depreciation from other plant & machineries, losses on account of fire were excluded from the block assets for value remained after insurance claim minus WDV.

On the other hand, assessee has shown details of the premium paid and Filtrona Auto Pack System was also insured by the appellant. And also paid tax on insurance claim receipts. But lower authorities were not convinced with the contention of the assessee and made addition of Rs. 50,11,623/- and confirmed by the ld. CIT(A).

We have gone through the relevant record and impugned order and heard both the parties, assessee has claimed loss on account of fire of Rs. 50,11,623/- against insurance company received by the appellant. And in support of its contention, assessee has submitted all the details pertaining to loss such as surveyor report bills and invoices of purchase of machines which were destroyed during fire and whatever claim have been received by the appellant same was after detailed enquiry by the insurance company and 4 . A.Y. 1999-2000 assessee/ appellant has also submitted all the details with regard to purchase of machines etc. And ld. D.R. has nothing to controvert arguments of the ld. A.R.

After considering the facts and circumstances of the case and in the light of material available on record, we are of the opinion that ground of appeal deserve to be allowed.

In this result, this ground of appeal is allowed.

And considering the average purchase rate of Rs. 50,000/- per metric Ton, the value of bogus purchase came to around Rs. 12,00,000/- was disallowed by the ld. CIT(A).

We have gone through the relevant record and impugned order. Ld. CIT(A) sought detail remand report wherein details of transport vehicles were given wherein it is shown that goods were loaded were more than of the capacity of the goods vehicle and for strengthen the goods, ld. CIT(A) has called for RTO record as well.

As we can see, on 20th March, 1999, the vehicle No. GJ-1-V-6343 Vehicle load capacity was 3270 Kgs wherein appellant has shown 5000 Kgs when Bench asked specifically to ld. A.R. that whether above said goods vehicle were ever challaned by the transport authority or by the traffic police for 6 . A.Y. 1999-2000 overloading of the goods, He expressed inability to give any satisfactory reply.

In our considered view, ld. CIT(A) has passed reasoned order after making detailed enquiry and same does not require any kind of interference at our end. Therefore, we dismiss this ground of appeal.

In the result, appeal filed by the Assessee is partly allowed.