In the facts and circumstances of this case, the determining of date when the loss was incurred will have to be derived from the admitted facts. It is not a matter of dispute that the fire which resulted in destruction of the stock of the applicant-assessee took place on 26.3.1978. The aforesaid fire destroyed the stock/goods of the applicant-assessee lying with the PSWC. Despite the destruction of the stock/goods during the financial year 1977-78 (assessment year 1978-79), the applicant-assessee consistently has been showing these goods in the inventory of the closing stock, stating therein, that these goods were lying with the PSWC. According to the learned counsel for the applicant-assessee, the aforesaid reflection was valid, bona fide and genuine because of the fact that applicant-assessee had never accepted that any loss had been incurred by the applicant-assessee in spite of fire on 26.3.1978 where his stock/goods were destroyed. The reason for the applicant-assessee to entertain the aforesaid belief was, because the responsibility/ liability of the destruction of the stock/goods in the fire which took place in the godowns of the PSWC on 26.3.1978, was that of the PSWC itself, as the PSWC was the custodian of the stock/goods while they were stored in the godowns of the PSWC. It is therefore, that the applicant assessee even filed a civil suit on 15.11.1978 claiming compensation for the said goods/stock. It is only when the claim raised by the applicant-assessee for reimbursement of the loss on account of the fire at the godowns of PSWC failed, that the applicant-assessee accepted for the first time that the aforesaid loss was not reimbursable, and as such, accepted the same as loss in the hands of the applicant-assessee. The applicant-assessee therefore, submitted a revised return of income on 14.3.1984 claiming a deduction on account of the loss of the aforesaid stock/goods.
It is apparent from the facts noticed in the foregoing paragraph that the applicant-assessee in spite of the fire which destroyed stock/goods belonging to the applicant-assessee, did not accept the same as his own loss till the dismissal of the civil suit filed by him, and it is only after the dismissal of the aforesaid civil suit, that applicant-assessee acknowledged that he had incurred the said loss. Since the aforesaid civil suit was dismissed on 31.5.1982 i.e. during the financial year 1982-83 (assessment year 1983-84), we are of the view that the loss must be accepted to have incurred during the financial year 1982-83 (assessment year 1983-84). As such, we are satisfied that the revenue should have allowed the applicant assessee a deduction of the aforesaid loss from its income in the assessment year 1983-84.