ORDER
G. SANTHANAM, A. M. :
This is an appeal by the assessee.
2. The ground of appeal is as follows :
“The learned CIT(A) erred in not allowing the claim of Rs. 32,09,670. The CIT(A) ought to have appreciated the fact that the appellant is following mercantile system of accounting and as such the claims made against the appellant for damages and provided in the books have to be allowed in full.”
3. The assessee is a partnership firm of transporters. The previous year relevant to the asst. yr. 1986-87 ended on 31st March, 1986. Mercantile system of accounting is followed by the assessee. In its transport work account, the assessee had claimed an expenditure of Rs. 50,60,274 as claims made. It was explained that the said amount included provision relating to claims against loss and damaged goods to the tune of Rs. 32,09,670. The Assessing Officer noticed that the various clients had written to the assessee claiming damages, etc., but the assessee had not accepted such claims. The expenditure under this head in the immediately preceding accounting year amounted to Rs. 23,04,105 only. He also found that in many cases the claims were settled at lesser amounts. Therefore, the Assessing Officer was of the view that as on 31st March, 1986, the liability to the extent of Rs. 32,09,670 was neither ascertained nor accepted. Hence, he disallowed the claim in such sum. The assessee appealed. The CIT(A) noticed that an identical issue, though different in figures, had come up before him for the asst. yr. 1985-86 and for the detailed reasons stated in his order in ITA 34:CC:CIT:88-89 dt. 29th Nov., 1989 he held that the provision of Rs. 32,09,670 towards the claim for loss or damage of goods cannot be allowed in the assessment year under appeal. The assessee is on further appeal.
4. It is agreed before us that the issue is identical with that for the asst. yr. 1985-86 though figures are different. Both Sri C. K. Nair, the learned counsel for the assessee and Sri C. Abraham, the learned senior Departmental Representative submitted that they are adopting the same arguments as were advanced before us in the assessees own case for the asst. yr. 1985-86, in ITA Nos. 104(Coch) 90 and 160(Coch) 90 in relation to the above claim. We have gone through the detailed list of claims made by different parties against the assessee, which is the subject-matter of dispute before us. There are 58 claimants each one encased in a file. The relevant lorry No., date of transport, origin and destination of transportation, the amount provided against such claims, the amount settled subsequent to the end of the previous year against some of the claims for which the provision was made, the names and addresses of the claimants and also the stage at which the claims were pending adjudication, etc. are also furnished in the list of claims. All the claims have originated during the previous year relevant to the asst. yr. 1986-87. Out of the provision of about Rs. 32 Lakhs, 50% of the same had been settled within a period of 2 1/2 years. These facts are not disputed. We have also gone through our order cited supra. Paras 10 and 11 of the order deal with the issue on hand though the figures are different. The Tribunal observed in that case as follows :
“The short point at dispute is whether the provision made in the books in a sum of Rs. 9,58,532 should be allowed in the year in which such provision was made or in the year in which the actual settlements took place. It is the Revenues contention that no liability arose to the assessee to pay for such claims until the amount is ascertained or otherwise settled. In our considered opinion, the occurrence of a liability is one thing and the quantification of the same is another thing and both these aspects should not be mixed up. The claims are towards loss of goods in transit or damages suffered to the goods in transit or for non-delivery of the goods. These incidents have taken place during the relevant previous year provoking the consignors to put in their claims for damages arising on such incidents. Since the happenings had taken place in the relevant previous year and as the consignors have noticed their claims against the assessee in the relevant previous year and as the assessee has recognised such claims by making a provision in its books in a corresponding sum, it cannot be said that it is a unilateral claim on the part of the assessees consignors nor can it be said that the liability did not accrue to the assessee as against the claims. The exact amount to be settled as against these claims might be a subject-matter of negotiations or persuasion or Court proceedings, but that is all in the realm of quantification of the claims and the quantification of the same at a later date cannot have a bearing on the accrual of the liability in the year of account. If the assessee had made an ad hoc provision without rhyme or reason one could say that the provision was excessive or unreasonable, but if the provision had been made on the basis of the claims themselves, merely because the assessee was either disputing the claims or seeking to reduce the amount of such claims, it cannot be said that the amount provided for in the books of accounts on the basis of the claims preferred by the consignors was either unreasonable or excessive or on an ad hoc basis. Thus, we reject the Revenues arguments”.
11. Sri C. Abraham, the learned senior Departmental Representative, submitted that when a consignor consigns goods he agreed for the conditions in terms of which the goods are accepted by the carrier and both the consignor and consignee are bound by the terms of the consignments note. In this connection, two sample copies of the Goods Forwarding Note (one of A. B. T. Parcel Service, Coimbatore and another of Kalpaka Transport Co. Ltd., Calicut) were produced before us and it is agreed on both sides that similar forms and procedures are followed in the case of the assessee also. Clauses 4 and 5 of the Goods Forwarding Note in the case of A. B. T. Parcel Service, Coimbatore, are as follows :
“4. The Company will be at liberty to tranship goods from one vehicle to another at the Companys option and without incurring any liability for risks or damages arising our of such transhipment.
5. The Company is not responsible for internal damages to the contents or package or damages to the packed goods or damages to perishable articles by deterioration or damages to bottle articles if the packages are delivered in the same apparent condition in which they are tendered for despatch by the consignor.”
Clauses 4 and 5 of the sample of Goods Forwarding Note in the case of Kalpaka Transport Co. Ltd., Calicut, are as follows :
“4. The Company has the right to transport the consignment over parts or whole of distance by road, rail or water in their own vehicles or in the vehicles of others. In case the goods are entrusted to another carrier, the other carrier shall, as between the consignor and the company be deemed to be the Companys Agency, so that the Company shall notwithstanding the delivery of the goods to the other carrier continue to be responsible for the safety of the goods and for their due delivery at destination.
5. The Company shall not be liable for any loss or damages due to pilferage, theft, whether conditions, strikes, riots, disturbances, fire explosion or accident provided however all reasonable precaution usually taken are taken by the Company to provide against such contingencies.”
These clauses are printed on the reverse of the Goods Forwarding Note but there is a foot-note in the front as follows :
“I do hereby certify that the declaration made above is correct and I have satisfied myself with the full knowledge of the conditions referred on the reverse and hereby accept to abide by the same.”
(A. B. T. Parcel Service, Coimbatore).
“We do hereby certify that we have ourselves satisfied that the description etc. of the goods tendered above have been correctly entered and shall abide by the rules and conditions of the company as recorded on the reverse. We also agree that if, due to defective documents, the goods are detained as confiscated by the Government, the carrier shall not be held responsible.” (Kalpaka Transport Co. Ltd. Calicut).
On the basis of the above documents, Sri Abraham vehemently contends that the transport company is not at all liable for the damages or loss of materials while in transit, unless it is shown that the loss or damage took place on account of criminal act or negligence of the carrier, its agents and servants. Reliance is placed on Ss. 8 and 9 of the Carriers Act, 1865. Sec. 8 of the above Act reads as follows :
“8. Common carrier liable for loss or damage caused by neglect or fraud by himself or his agent. -Notwithstanding anything hereinbefore contained, every common carrier shall be liable to the owner for loss of or damage to any property delivered to such carrier to be carried where such loss or damage shall have arisen from the criminal act of the carrier or any of his agents or servants and shall also be liable to the owner for loss or damage to any such property other than property to which the provisions of S. 3 apply and in respect of which the declaration required by that section has not been made, where such loss or damage has arisen from the negligence of the carrier or any of his agents or servants.”
Sri Abraham contends that unless the carrier is guilty of criminal act no liability arises to the carrier as a result of damage or loss to the property. Sri Nair, on the other hand, contends that the section opens with a non abstante clause. The first limb of the section deals, no doubt, with the liability for the criminal act of the carrier, his agent or servants. Under the second limb of the section, except in relation to the loss or damage to the property, to which the provisions of S. 3 apply, and in respect of which the required declaration had not been made, the carrier is liable for any loss or damage arising on account of negligence on his part, his agents or servants. We uphold the contention of Sri Nair. The carrier is absolved of the liability for any damage or loss in respect of goods in excess of the value of Rs. 100 incurred to the scheduled articles (articles prescribed under the Schedule to the Act) unless a declaration has been made in the proper form. The scheduled articles are as follows :
Gold and silver coin.
Gold and silver in a manufactured or unmanufactured state.
Precious stones and pearls.
Jewellery.
Time-pieces of any description.
Trinkets.
Bills and hundis.
Currency-notes of the (Central Government) or notes of Banks, or securities for payment of money, English or foreign.
Stamps and stamped paper.
Maps prints and works of art.
Writings.
Tittle-deeds.
Gold or silver place or plated articles.
Glass.
China.
Silk in a manufactured or unmanufactured state, and whether wrought up or not wrought up with other materials.
Shawls and lace.
Cloths and tissues embroidered with the precious metals or of which such metals form part.
Articles of ivory, ebony or sandalwood.
Art pottery and all articles made of marble.
Furs.
Government securities.
Opium.
Coral.
Musk, Ltr. Sendalwood oil, and other essential oils used in the preparation of it or other perfumes.
Musical and scientific instruments.
Feathers.
Narcotic preparations of hemp.
Crude India-rubber.
Jade, Jade-stone and amber.
Gooroochand or Gooroochandan.
Cinematograph films and apparatus.
Zahir Mohra Khatai.
Platinum.
Palladium.
Iridium.
Radium and its preparations.
Tantalum.
Osmium.
Rutheniuum.
Rhodium.
Agarwood.
It is not the case of the Revenue that the claims relate to the above goods. If the declaration has been made and loss or damage arises on account of the criminal act on the part of the carrier, his agents or servants, then the carrier will be liable for the same. In respect of all other goods, the carrier will be liable for negligence. This is the effect of reading together Ss. 8 and 3 with the Schedule to the Act. The Revenue places reliance on S. 9 of the Carriers Act, 1865 to say that unless the agents show that the loss arose out of his negligence or criminal act on his part, no liability arose to him. Sec. 9 of the above Act is as Follows :
“9. Plaintiffs, in suits for loss, damage, or non-delivery, not required to prove negligence or criminal act. – In any suit brought against a common carrier for the loss, damage or non-delivery of goods entrusted to him for carriage, it shall not be necessary for the plaintiff to prove that such loss, damage or non-delivery was owing to the negligence or criminal act of the carrier, his servants, or agents.”
A bare reading of the above section would show that the person claiming the damages or loss need not prove that such loss or damage or non-delivery was owing to the negligence or criminal act of the carrier, his agents or servants. In other words, there is a rebuttable/presumption as against the carrier that the loss or damage arose out of negligence on his part, his agents or servants. Of course, the carrier can recluse itself from the liability if the presumption against it is rebutted. Till that stage is reached, the liability primarily lies on the assessee-carrier. In this view of the matter, we hold that the assessee can have a reasonable apprehension of its liability to pay for the damages or loss to the property carried by it. Even otherwise, the assessee is liable, if not as a carrier, atleast as an insurer. In the case of Indian Roadways Corporation & 4 ors. vs. M/s. M. S. Unneerikutty & 2 Ors. (1990) 1 KLJ 86), it was held that “the printing of the conditions on the reverse of the consignment note is not sufficient to constitute a special contract signed by the owner or an agent duly authorised within the meaning of S. 6 of the Carriers Act to protect the carrier from liability. A common carrier is not a mere bailee of goods entrusted to him. He is answerable for the loss of goods even when such loss is not caused by negligence or want of care on his part. The only exceptions recognised by law are the acts of God and of States enemies, or a special contract that the carrier may choose to enter into with the customer”. The mere printing of the conditions referred to by Sri Abraham which are found on the reverse of the Goods Forwarding Note cannot constitute a special contract as has been held by the Kerala High Court in the case cited supra. Further, the foot-note carried in the Goods Forwarding Note referred to by Sri Abraham, is, in our opinion, does not improve his case because reference is made therein to the conditions on the reverse of the Goods Forwarding Note and it has not been shown before us that the consignors has signed on the reverse in taken of having accepted the conditions. Therefore, we hold that the assessee is entitled to make a provision for the loss or damage claimed against it by the consignors during the relevant pervious year on a reasonable apprehension of its liability either as a carrier or as an insurer of goods. The disallowance is deleted.”
Facts being similar, we follow our own decision for the sake of consistency and delete the disallowance of Rs. 32,09,670.
5. The assessee sought leave of the Tribunal to raise the following additional ground :
“The additional lorry hire, hire advance, trip advances and spare bill payable to Saradhi Lines to the extent of Rs. 434000.49 may be allowed as a deduction in this year.”
The facts leading to the additional ground are as follows : The assessee had claimed as deduction in the assessment for the asst. yr. 1985-86 a sum of Rs. 43,400.49 in respect of additional lorry hire, hire advance, trip advances and spare bills payable to Saradhi Lines P. Ltd. The same was disallowed. The CIT(A) stated that the expenditure did not relate to the asst. yr. 1985-86. On second appeal also the Tribunal held that it did it did not relate to the asst. yr. 1985-86 since the debit notes were issued by Saradhi Liner P. Ltd., after 31st March, 1985 on which date the assessee closed its accounts for the asst. yr. 1985-86. Now that the matter is pending for the succeeding assessment year, namely, 1986-87, the assessee pleads that the sum of Rs. 43,400 should be considered for being allowed as a deduction as it pertained to the asst. yr. 1986-87. Shri Abraham, has not objection to admitting the additional ground on the above facts. However, he would submit that as the Assessing Officer did not have an opportunity to look into character of the deduction claimed and the components thereof, the matter may be restored to the Assessing Officer with suitable directions.
6. Having regard to the submission of the learned senior Departmental Representative, we admit the additional ground of appeal and restore this particular issue to the Assessing Officer with a direction to look into the admissibility of the claim and pass such orders as he may deem first in accordance with law on this aspect of the matter.
In the result, the appeal is allowed.
