Goldsmith can't claim I-T exemption on confiscated gold: Bombay HC
September, 13th 2008
A smuggler can avail I-T exemption for business loss if the gold he has smuggled is confiscated, but a licensed goldsmith can't seek such a benefit as he is not expected to deal in illegal gold that stands the risk of being seized, the Bombay High Court has held.
The case before the High Court pertained to Income Tax assessment of Mahendra Jain, a Mumbai-based goldsmith, who possessed a licence under the Gold Control Act. Under the licence, Jain was not allowed to sell or buy gold and was authorised only to make ornaments from gold given by clients.
In April 1991, Directorate of Revenue Intelligence raided Jain's shop and seized bars of gold with foreign marks worth about Rs three lakh.
Jain pleaded that gold bars were given to him by one Raju from Bangalore to make ornaments. But Additional Commissioner of Customs did not accept this claim, and confiscated the gold as contraband.
When the IT officer assessed Jain's income for the financial year 1992-1993, the value of gold bars was added as 'income from undisclosed sources'.
Jain appealed against this addition. Before the Income Tax Appellate Tribunal, he also pleaded that if the value of gold bars was to be added as income, then the same must also be deducted as business loss, because the gold was confiscated and never returned to him. The Tribunal rejected this argument.