Applicability of Income tax on excess insurance

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This query is : Resolved

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This discussion clarifies the taxability of excess insurance claims received for a stolen car. Although the company initially reduced the excess claim from taxable income, the CPC added it back. The consensus is that the CPC's action is correct and no rectification is possible under Section 143(1), though options like Section 154 or an appeal might be considered.

Vinod

Vinod (Querist)
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25 May 2020 Sir,

We purchased a car during F.Y-2017-18 for Rs. 14,00,000/- (approx). After completion of the year the depreciated value of the car is Rs.13,05,000/- (As per Company act) in books during F.Y. 2018-19. This car stolen during the first quarter of F.Y. 2018-19 and we claimed insurance. We got the claim during 3rd quarter of F.Y.2018-19 for Rs. 14,00,000/- (full value of the vehicle). We adjusted the book entry by reducing the depreciated amount from gross block against insurance claim. Apparently, during finalization of F.Y.2018-19, we reduced the excess amount of insurance claim received ( 1400000-1305000=95000/-) from our taxable income along with Dep. as per Income tax. But CPC added back this amount to our taxable income and calculated tax on it in our Intimation u/s. 143(1).

Please clarify how to rectify this.

Thanks