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2018 (2) TMI 168 - AT - Income TaxAllowability of busniss loss - machinery has been imported by the assessee but before it could be transported to the assessee’s premises at Hyderabad and installed and thereafter put to use, the machinery got damaged - Held that:- In the case before us, since the machinery has not been installed and put to use by the assessee, the assessee cannot capitalize the same and the depreciation thereon cannot be allowed. An expense is capitalized when it is recorded as an asset, due to its future value on the balance sheet, rather than as an expense in the income statement. Since the machinery got damaged even before it reached the assessee’s premises, and it had no future value, it was an expense. CIT(A) has, in fact accepted that this amount is allowable to the assessee but in the year of crystalization. The reason for confirming the disallowance is that the loss has not crystalized during the year, as the appeal by the assessee against the insurance company is still pending before the Hon’ble High Court of Madras. We agree with the assessee, that the business loss has occurred and is allowable to the assessee in the relevant assessment year and as and when the compensation is finalized by the Hon’ble High Court of Madras, and the assessee receives it, it would have to offer the same to taxation in such assessment year of receipt. The finding of the CIT(A) has not been challenged by the revenue and therefore it has become final.- Decided in favour of assessee
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