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TMI Blog2020 (12) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... can be claimed on capital assets and whether provisions of Section 50 of the Act will apply to the current situation when there are no other assets in the block except those sold? iii) Whether the ITO is entitled to partly accept expenditure and disallow the balance without assigning any reasons for either of the same?" 3. The relevant findings of the learned Tribunal with regard to the aforesaid two questions as given in para 2.6 to 3.3 till are extracted hereunder for ready reference:- "2.6 From a plain reading of the Section, it is clear that Section 41(2) is applicable only where the sale value along with scrap value exceeds the written down value. In such case, Section 41(2) mandates that realized value to the extent represented by cost and WDV of the asset should be charged to income as 'business income'. In the present case, the sale value realized is less than the written down value. So there is no question of any treatment as per Section 41(2). In this case, the assets involved are capital assets on which depreciation has been claimed. The sale price realized is less than the written down value of the respective block of assets after all depreciable assets were sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure. De hors production of any evidence, Assessing Officer could not have gone into the veracity of this expenditure. Under the circumstances, we set aside the order of the learned Commissioner of Income Tax (Appeals) and restore that of Assessing Officer on this issue." 4. The learned counsel for the Appellant/Assessee Ms.Madhupreetha Elango submitted that the if a loss is caused on the sale of the Capital Assets by the Assessee, the same should be allowed as Business Expenditure under Section 41(2) of the Act as it cannot be brought to tax under Section 50 of the Income Tax Act as held by the learned Tribunal. She submitted that the Assessee Company was in loss and was later on wound up and in the process of winding up, it not only sold some of its Assets on which depreciation was claimed by it under Section 32 of the Act and suffered losses thereon as the same was sold below the written off value of those assets in the Books of Accounts and therefore, such loss was clearly allowable as a Business Loss in the hands of the Assessee. She also drew the attention of the court to Section 70 of the Act to support her contention. 5. The relevant facts with regard to the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mply with the guidelines of SEBI to inform the change of address to the individual investors both by advertisement in prominent newspapers and also by individual communications. But, since there was closure of business in the year 2000, the relevant to Assessment Year 2001-2002, only a part of expenses could be recovered from the clients and the balance amount was claimed as 'Business Expenditure' which was disallowed by the learned Tribunal. 7. The learned counsel for the Appellant/Assessee submitted that it was a Business Expenditure in the regular course of business of the Assess at the relevant point of time during the previous year and therefore, the same could not be disallowed by the Assessing Authority as well as the learned Tribunal. As the Assessee had duly furnished its audited Balance Sheet before the Assessing Authority and thus the entire expenditure was duly verified by the Auditors as well as Books of Accounts maintained in the regular course of business. 8. Per contra, the learned counsel for the Revenue Mr.J.Narayanasamy, learned Senior Standing Counsel supported the impugned order of the learned Tribunal. 9. We have heard the learned counsel for the parties at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aggregate of the following amounts, namely:-- (i) expenditure incurred wholly and exclusively in connection with such transfer or transfers; (ii) the written down value of the block of assets at the beginning of the previous year; and (iii) the actual cost of any asset falling within the block of assets acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets; (2) where any block of assets ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets. "Set off of loss from one source against Income from another source under the same head of income. 70(1) Save as otherwise provided in this Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other situation of Carrying Forward such Business Loss is not really relevant but, such loss suffered actually by the Assessee could not have been disallowed by misconstruing both these provisions. 13. The Assessment of income in the hands of the Assessee implies Assessment of loss also and it is a question of fact depending upon the sale value realised by the Assessee on the sale of assets. Therefore, the first question deserves to be answered in favour of the Assessee and against the Revenue. We hereby do so. 14. The second question of law is concerned also, we are of the opinion that the Business Expenditure incurred by the Assessee in the form of Postage, Courier and Stationery Charges could not be disallowed by the Assessing Authority and the Tribunal. The incurring of those Expenditures was not doubted or disproved by the Revenue Authorities in the hands of the Assessee. No such finding of such Expenditure not having been incurred by the Assessee is available on record. Therefore, merely because the Assessee could not recover the whole or part of the said expenditure incurred in the course of business, particularly to comply with the guidelines laid down by SEBI and clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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