Fire-damaged trading stock loss held deductible as revenue expense, not capital loss

Delhi HC held that loss from goods destroyed by fire constituted deductible revenue loss where assessee was trading in those goods. The Tribunal correctly found the AO's addition unsustainable as the fire-damaged goods were part of trading stock, making the loss revenue in nature rather than capital. The department failed to contest the fire incident or related findings before the Tribunal. No substantial question of law arose for consideration, affirming the Tribunal's decision allowing the deduction.

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Issues:
The only issue in this appeal concerns the addition made by the Assessing Officer (AO) with regard to loss claimed by the respondent/assessee due to goods being damaged/destroyed by fire.

Details of Judgment:

1. The respondent/assessee claimed a deduction of Rs. 5,24,06,053/- due to loss of trading goods in a fire incident on 05.12.2014.
2. The AO added this amount to the income of the respondent/assessee as a contingent loss pending processing by the insurance company.
3. The Commissioner of Income Tax (Appeals) confirmed this addition, citing lack of evidence and finalization by the insurance company.
4. The Tribunal reversed the decision, considering the fire incident date, FIR filing, and the revenue loss nature of the destruction of stock-in-trade.
5. The Tribunal also referred to a judgment stating that destruction of stock-in-trade results in a revenue loss.
6. The respondent/assessee provided correspondence with the insurance company and stated readiness to offer any sum received for tax under Section 41(1) of the Act.
7. The AO did not question the occurrence of the fire but doubted if the loss was an ascertained liability or a contingent loss.
8. The Tribunal found that the loss was a revenue loss and deductible, thus ruling the AO's addition as unsustainable.
9. No substantial question of law was found, leading to the dismissal of the appeal.

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