..... one of my friend is an individual carrying on business. His stock and machinery were damaged and destroyed in a fire accident. The value of stock lost (total damaged) was ` 6,50,000. Certain portion of the machinery could be salvaged. The opening WDV of the block as on 1-4-2016 was ` 10,80,000. During the process of safeguarding machinery and in the fire fighting operations, Mr. A lost his gold chain and a diamond ring, which he had purchased in April, 2004 for ` 1,20,000. The market value of these two items as on the date of fire accident was ` 1,80,000. Mr. A received the following amounts from the insurance company: (i) Towards loss of stock ` 4,80,000 (ii) Towards damage of machinery ` 6,00,000 (iii) Towards gold chain and diamond ring ` 1,80,000 . What will be the tax treatment of the above three items under the provisions of the Income-tax Act, 1961.
Dec. 08, 2017
