Capital Asset – Loss – The insurance claim received against dead horses – Taxability.

9. Commissioner of Income Tax (Exemption) Mumbai vs. M/s Poonawalla Estate Stud & Agricultural Farm.

[ITXA No. 541 of 2003, 535 of 2003 and 540 of 2003 dated: 09/07/2025. (Bom) (HC)]

[AYs : 1988 -1989, 1990-91, 1991-92 & 1995-96]

Section 41(1) vis a vis 45

Capital Asset – Loss - The insurance claim received against dead horses – Taxability.

The Assessee was carrying on the business of breeding, rearing and selling racehorses since the year 1967. At its Stud Farm, there were several mares and stallions. When a male horse or female horse was born, it was being treated as a stock in trade till it attained the age of 2 years. The value of such horses was determined by the Assessee on the basis of expenditure incurred on feeding, medical treatment, training etc. After the horse crossed the age of 2 years, it was either sold or was given on lease for horse racing or transferred to the Plant for being used for breeding activities. The horses have a racing life of about 3 to 5 years. Thereafter, they are mainly used for breeding and therefore such horses are treated as Plant and Machinery and accordingly in the Books of Accounts, the costs of such horses were added to the tot