plz tell me the exact treatment of losse OF RAW MATERIAL incurred by theft and fire....
in case of no insurance... firstly and incase of no insurance...secondly
as per income tax act
as per income tax act
Pankaj Arora
(Learner)
(3134 Points)
Replied 18 February 2011
theft loss is not permissible but yes for fire loss. Pass your fire loss in P & L.
| Originally posted by : Pankaj Arora | ||
 |
theft loss is not permissible but yes for fire loss. Pass your fire loss in P & L. |
 |
can u tell me which case law or section i can be enlightened regarding this ????
xpenditure and loss are different items in accounting and commercial parlance as well as in the context of legal provisions like the income Tax Act.
The rules and exceptions applicable while considering allowability of expenditure may not applicable in case of consideration of business loss.
Business loss can be considered as per normal principles of accounting and commerce.
Other case of losses imbedded with illegality:
Some other cases of business or professional losses, which may have an element of illegality, immorality or against policy, are illustrated below:
a. loss of stocks in smuggling activity.
b.Loss of cash in profession of thief or robber.
c. Loss in business or profession of gambling prohibited speculation etc.
d. Loss of cash, stocks, or other valuable while transporting the same in the course of an illegal activity. For example, cash being carried to use for purchase of illegal stocks, or to use as bribes to officers may be lost in transit or may be seized by CBI or some other authority.
The above type of losses will be allowable as loss incidental to business or profession while computing income under section 28 read with S. 145, and cannot be considered as an item of "expenditure". Therefore, explanation to section 37(1) will not apply.
Business losses are allowable on ordinary commercial principles in computing profits.
for details see
https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=105
CAclubindia
