Judgement

Bose J.- This is an appeal from the High Court at Bombay in an Income-tax Reference under S. 66(1), Income-tax Act of 1922.

The reference was made to the Bombay High Court by the Bombay Bench of the Income-tax Appellate Tribunal in the following circumstances.

2. The appellant-assessee is a Company known as the Raghuvanshi Mills Ltd., of Bombay. The assessment year with which we are concerned is 1945-46. The assessee had insured its buildings, plant and machinery with various insurance companies and also took out, besides those policies, four policies of a type known as a "Consequential Loss Policy." This kind of policy insures against loss of profit, standing charges and agency commission. The total insured against under the latter heads was

Rs. 37,75,000 on account of loss of profits and standing charges, and

Rs. 2,25,000 on account of agency commission, making a total of Rs. 40,00,000.

On 18-1-1944 a fire broke out and the mills were completely destroyed. The various insurance companies therefore paid the assessee Company an aggregate of Rs. 14,00,000 on account in the year with which we are concerned under these policies. This was paid in two sums as follows: Rs. 8,25,000