Steal and claim received of motorcycle

This query is : Resolved

Sumit Dokania (Querist)
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06 May 2012 A Motorcycle of 1 of my Client was stolen in last Financial Year. Now he has received a claim from the Insurance Company (current F.Y.).
What will be the taxation policy for the whole incident in both the last F.Y. and the current F.Y.??

CA Ghanshyam Joshi

CA Ghanshyam Joshi (Expert)
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07 May 2012 Some more facts required for analysis.
1. Whether he is using the motercycle for Business purpose? - If yes, and depreciation is being claimed in the books of accounts then the claim value shall be reduced from the WDV of motercycle (block, if any). If there is no block of motercycle exists - only one motercycle was there then in the year when it was stolen it might had been written off from the books of accounts and might have been claimed the loss due to theft - in this case when the assessee receives the claim from insurance company that shall be treated as income under the head Profit/Gain from Business income.

2. If the motercycle was being used for personal purpose - not accounted in the books of business - the receipt of claim shall be treated as Capital receipt without attracting Income Tax.

Sumit Dokania

Sumit Dokania (Querist)
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07 May 2012 Thank You Ghanshyam Joshi Sir

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