TMI Blog2018 (2) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... see’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 bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not dismiss the legal issue set out in several case laws cited by Assessee purely on a wrong assumption that f acts are not similar. 5. The Learned Commissioner of Income Tax (Appeals) is not legally and f actually correct in holding that the loss on destruction of machinery is a capital loss (namely Balance Sheet item) without any f inding as to whether the loss can be deducted in computing the Total Income for Assessment Year under consideration. 6. The Ld. CIT(A) is not legally and f actually correct that the loss on destruction of machinery cannot be allowed as a deduction on a wrong understanding that the amount of loss is not ascertainable. 7. For the grounds and for such other grounds that may be adduced at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee vide letter dated 14-10-2016, submitted that the said machinery was imported from Germany during the relevant financial year and the machinery, after customs clearance at Chennai, was loaded onto a truck for transportation to the company s factory at Hyderabad, but just outside the warehouse at Chennai, the truck capsized and extensive damage was caused to the machinery in July 2013. It was submitted that the company had imported the machinery duty free on the basis of an export obligation guarantee and since the machinery was damaged and cannot be put to use, the company had to pay customs duty along with interest computed from the date of import, and hence the loss of destruction of machine at ₹ 3,79,42,277/-, being lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07,168/-. 4. The CIT(A), observed that the machinery imported did not reach the factory premises of the assessee and was not included in the block of assets and was not put to use and since machinery met with an accident and got damaged, the amount paid to German Company would only be a balance sheet item as an advance paid for the asset . He observed that the amounts received from New India Assurance Company of ₹ 1,26,35,109/- would again be a balance sheet item under the head payable to insurance company and that the said quantum of liability would be known after the insurance claim is crystalized. In these circumstances, she held that the amount of loss of ₹ 2,53,07,168/- cannot be allowed in advance, pending its crysta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT 65 SOT 15. 6. The Ld. DR, on the other hand, supported the orders of the authorities below and submitted that the asset being a capital asset, the capital loss cannot be allowed from the profits of the business as rightly held by the A.O. 7. Having regard to the rival contentions and the material placed on record, we find that the 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. There is no doubt that the machinery has been imported for increasing the profit earning capacity of the assessee and therefore, it is for the business of the assessee. Any expenditure incurred wholly and exclusively fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
