TMI Blog1980 (8) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... owing four questions to us for our opinion : " (1) Whether the payment to the Textile Commissioner by the assessee for contravention of the instructions given by the Textile Commissioner was in the nature of penalty and not incidental to the carrying on of the assessee's business ? (2) Whether, on the facts and in the circumstances of the case, the payments of Rs. 2,267 and Rs. 1,78,576 in the assessment years 1969-70 and 1970-71, respectively, made to the Textile Commissioner under the provisions of clause 21C(b) of the Cotton Textile (Control) Order, 1968, was business expenditure allowable under section 28 or under section 37 of the, Act ? (3) Whether the claim of the assessee of Rs. 46,414 written off in relation to the bore-well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a limited company and is carrying on business some years earlier than the assessment year under consideration. The assessee had sunk this bore-well and on the expenditure incurred by IT III the bore-well depreciation was being allowed from year to year and in the year under consideration the written down value of the bore-well was Rs. 46,414. It had been capitalised in the books of account of the assessee and the bore-well was treated as part of the plant of the assessee. In the year under consideration, the assessee discarded this bore-well as it found that the water from the bore-well was very hard and was not suitable unless specially treated for the purposes of boiler feed for which the water was intended to be used. The assessee appare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o., the advice was given on June 13, 1967, and this amount could not, therefore, have been written off in the assessment year under appeal. According to the Tribunal, the assessee had not established by cogent and convincing evidence that the writing off of this amount, was necessary in that year. The Tribunal, therefore, reversed the order of the AAC and restored the order of the ITO. Under s. 32 of the I.T. Act, 1961, in respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, deductions mentioned in the different clauses of sub-s. (1) of s. 32 are to be allowed while computing profits or gains from business or profession and under cl. (iii) of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the proviso that the deficiency must be actually written off in the books of the assessee. It is the case of the assessee-and that has not been disputed by the other side-that in the books of the assessee the amount of Rs. 46,414 has been written off in the year under consideration. Whether an alternative use for the water from the bore-well could or could not have been found and whether, by the installation of water softening plant, water from the borewell could or could not have been utilised for the purposes of the business of the assessee, are questions which have to be decided on commercial considerations by the assessee itself and it is nowhere laid, down that the discarding should be to the satisfaction of the ITO or the I.T. autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 234 (Ker), at page 246, that the assessee concerned discards a piece of machinery because of obsolescence even though it may be capable of giving some more years of service but the decision has ultimately to be taken on commercial considerations by the assessee himself and by no one else and the wisdom of the discarding cannot be questioned by the I.T. authorities. Of course, if they come to the conclusion that discarding was a device to evade income-tax they can disallow the claim of the assessee on this ground but that can be done only upon the factum of discarding rather than advisability or desirability of discarding of particular asset, if it otherwise falls under s. 32(1)(iii). Under these circumstances, it must be held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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