Trading loss on relinquished imported goods requires actual crystallisation; mere surrender of title is not enough.

Relinquishment of title to imported goods under the Customs Act did not, by itself, create an immediately deductible trading loss. The statutory framework allowed customs and port authorities to dispose of the goods only through prescribed procedures, and any sale proceeds could still yield a surplus payable to the importer after statutory dues and expenses. Because the goods had not been sold during the relevant accounting period and no actual loss had crystallised, the assessee failed to establish an allowable loss. The trading loss claim was therefore rejected and the disallowance sustained.

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Issues: Whether the assessee was entitled to claim a trading loss on account of relinquishment of title to imported goods under the Customs Act and the Major Port Trusts Act.

Analysis: Relinquishment under section 48 of the Customs Act, 1962 merely enabled the Customs Authorities to take steps for disposal of the imported goods and did not, by itself, result in an immediate loss of the goods to the assessee. The statutory scheme under sections 61, 62 and 63 of the Major Port Trusts Act, 1963 showed that the goods could still be sold only after notice and the sale proceeds, after meeting statutory dues and expenses, could yield a surplus payable to the importer. Since the goods had not been sold during the relevant accounting period, and the assessee had not established an actual realized loss, no deductible loss had accrued.

Conclusion: The claim of trading loss was not allowable and was rejected.

Final Conclusion: The assessee failed to establish any actual loss in the relevant year merely by relinquishing title to the imported goods, and the addition/disallowance was sustained.

Ratio Decidendi: Relinquishment of title to imported goods under section 48 of the Customs Act, 1962 does not, by itself, create an allowable loss unless the goods are actually sold or the loss is otherwise crystallized in the relevant period.

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