Maharashtra Minerals Corporation Ltd. vs Commissioner of Income Tax

U.T. Shah J.

u/s 256(1) of the Income Tax Act, 1961, the Tribunal has referred to us the following question of law :

"Whether, on the facts and in the circumstances of the case, the assessee was entitled to the deduction of Rs. 17,640 being the loss on demolition and sale of hutments and labour camp at Shrivardhan in its assessment for the accounting period relevant to the assessment year 1972-73 under the provisions of section 32(1)(iii) of the Income Tax Act, 1961 ?"

The facts, in brief, as stated in the statement of the case, read as under :

"From the orders of the Income Tax Officer as also the Appellate Assistant Commissioner it appears that the assessee''s own case was that the hutments in question were not used by the assessee as dwelling houses for its workers right from the assessment year 1968-69 and in the face of the above observations of the Departmental authorities, there is no basis for us to assume that some of the huts must have been used for the said purpose in the relevant year. Now, as regards the legal position, we are of the view that the asset, which is sold or discarded or is demolished and the loss on which is claimed u/s 32(1)(iii) of the Act, must have been used for the purpose of the business or profession of the assessee in the year of assessment in which it was claimed and the fact that the asset may have been used for the purpose of the business in the earlier years, will not entitle the assessee to the allowance u/s 32(1)(iii), if the same was sold or discarded in a subsequent assessment year. The decision of the Bombay High Court in Bharat Line Ltd. Vs. Commissioner of Income Tax, Bombay City I, , is an authority in support of this view of ours. We, accordingly, accept the Departmental appeal, reverse the order of the Appellate Assistant Commissioner and restore that of the Income Tax Officer disallowing the loss of Rs. 17,640 in question."

At the time of hearing, learned counsel for the assessee was fair enough to state that this reference may be disposed of on the facts found by the Tribunal. He also pointed out that the amount involved is not big. Learned counsel for the Revenue, on the other hand, stated that in view of the undisputed facts found by the Tribunal, the assessee was not entitled to deduction of Rs. 17,640 and, therefore, the Tribunal was fully justified in upholding the action of the Income Tax authorities.

On a due consideration of the submission of the parties and the material available on record, we do not find any infirmity in the order of the Tribunal upholding the disallowance of Rs. 17,640. In this view of the matter, we answer the question in the negative and against the assessee.

No order as to costs.