Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (4) TMI 1186 - AT - Income TaxAddition of provisions for liquidated damages - HELD THAT:- Since, the matter stands adjudicated and allowed for several years prior, in the absence of any material change, we hereby hold that the addition made by the AO cannot be sustained. Advance and deposits written off - HELD THAT:- We are in agreements with the fundamentals argued that it is a generally accepted principle that losses, other than capital losses, which arise out of and are incidental to the business of assessee must be necessarily deducted in the ascertainment of profits of the business u/s 28 - Section 28 of the Act provides for taxation of ‘profits and gains’ of any business or profession. From the charging provisions of the Act, it is discernible that the words ‘income’ or ‘profits and gains’ should be understood as including losses also, so that, in one sense ‘profits and gains’ represent ‘plus income’ whereas losses represent ‘minus income’. In other words, loss is negative profit. Both positive and negative profits are of revenue character. Both must enter into computation, wherever it becomes material, in the same mode of the taxable income of the assessee. Therefore, the trading loss of a business is deductible in computing profits earned by the business even though there is no specific provision for allowance thereof. As decided in MYSORE SUGAR COMPANY LIMITED [1962 (5) TMI 3 - SUPREME COURT] while computing the ‘assessable profits and gains’, an appellant is entitled to claim incurred for the purpose of its business but not covered under any specific clause. On going through the facts and circumstances of the instant case, keeping in view the judgments of Hon’ble Supreme Court since the amount has been incurred during the regular course of business, the same is allowed to be claimed under expenses for the year.
|