2026 (7) TMI 1226

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....Income Tax Act, 1961 (hereinafter called 'the Act'). The relevant Assessment Year is 2015-16. ITA No. 1374/CHNY/2026 2. Brief facts of the case are as follows: The assessee is a company engaged in manufacturing men's garments. For the assessment year 2015-16 filed its return of income on 30.09.2015 declaring total income as 'nil'. The case was selected for scrutiny under CASS and the assessment was completed u/s. 143(3) of the Act on 30.06.2017 accepting the returned income. Subsequently, it has been noticed that the assessee company has received a sum of Rs. 14,05,456/- on 28.11.2014 from Royal Sundaram Alliance Insurance Company Ltd., on account of full and final settlement of Fire Insurance claim. On verification of the P&L account....

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....tainable. 3. The Ld. CIT(A) erred in upholding the assumption of jurisdiction u/s. 147 on an issue which was already part of the books of account and Profit & Loss Account examined during the original assessment u/s. 143(3), amounting to a clear and impermissible change of opinion. 4. The Ld. CIT(A) failed to adjudicate the legal contention that the notice u/s. 148 was issued beyond the permissible period as contemplated under the first proviso to S. 147 and is therefore barred by limitation. 5. Having accepted that the original scrutiny did not specifically pertain to the issue raised in reassessment, the Ld. CIT(A) nevertheless erred in treating the same as escaped income, overlooking that the material was alrea....

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....f hearing, the appellant prays that the order passed by the Assessment Unit be cancelled and render justice," 5. We shall first adjudicate the issue on merits. The Ld. AR submitted that the assessee had suffered a fire loss aggregating to Rs. 27,76,609/- during the relevant previous year. Against the said loss, insurance compensation of Rs. 14,05,456/- was received from the insurance company. The assessee had adjusted the insurance compensation against the actual loss suffered and debited only the net loss of Rs. 13,72,954 to the Profit & Loss Account. Therefore, the insurance receipt had already been duly accounted for and no excess deduction had been claimed by the assessee. The Ld. AR contended that the AO erred in separately adding t....

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....e net loss of Rs. 13,72,954/- to the Profit & Loss Account. Neither the AO nor the FAA has disputed the occurrence of the fire accident, the quantum of loss suffered for the stock, the insurance settlement received, or the accounting treatment adopted by the assessee. Once the insurance compensation has already been adjusted against the loss suffered, a separate addition of the compensation amount would result in taxing the same receipt twice while ignoring the corresponding loss. Such an approach is contrary to the settled principles governing computation of business income. 8. We also find merit in the contention of the assessee that while the Assessing Officer sought to tax the receipt by invoking section 45(1A) of the Act, the FAA su....