9911796707
TMI Blog1987 (1) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Rs. Rs. Machinery and other fixed assets 1,42,900 1,42,900 Furniture and fittings 27,000 27,000 Stock 1,89,600 1,68,600 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Rs. Rs. Claim received towards fixed assets : 1,42,900 Less : WDV of water cooler 1,250 WDV of machinery burnt 47,418 ------ 48,668 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h amount as has been paid if there had been only a partial damage of such nature as could be effectively repaired by spending a small amount of Rs. 15,657. The fact that a very high amount had been paid by insurance company indicated that the assessee represented to the insurance company that the machinery had been destroyed and not partially damaged. Thus, it was the assessee's own case at the relevant time that there was destruction and not partial damage and for that reason the assessee had written off the entire written down value of the machinery. He accordingly confirmed the conclusion of the ITO that this was a case of destruction as distinguished from partial damage and as such provisions of section 41(2) were attracted. He then considered the alternative submission of the assessee to the effect that assessable profits under section 41(2) would be confined to the difference between original cost and written down value and accepted the same. He directed the balance to be assessed as capital gains after verifying whether they were long-term capital gains or short-term capital gains. The assessee is now in further appeal before us. 6. Shri Dastur, the learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly destroyed in the fire. The said machinery would not have been destroyed. If the same had been partially damaged as was subsequently asserted, the same would not have been removed from the stock of machinery. It was contended that when the assessee mentioned in the said schedule that Rs. 65,886.92 included plant and machinery in the said schedule that Rs. 47,417.67 'burnt' in fire, he could as well have meant that said machinery had been damaged in fire. We are unable to agree. As already stated, the said machinery has been removed from the stock itself which is indicate of the fact that the same had been destroyed and not merely damaged. Damaged machinery would not go out of the stock. It is the destroyed machinery which would be deleted from the stock by adjustment entry. This view is confirmed by other entries in the same schedule. There are three more items in the column entitled 'Sales/Adjustments during the year'. The other three are: &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the assessee has produced before us copy of assessment order for the assessment year 1980-81. This assessment order was not before the Commissioner (Appeals). Perhaps this assessment order was passed subsequent to decision of the impugned order of the Commissioner (Appeals). No date is mentioned in the assessment order. We proceed to consider the same. From the assessment order, it appears that in the calendar year 1979 (assessment year 1980-81) the assessee made reverse entire about plant and machinery in question whose written down value in calendar year 1976 was Rs. 47,417.67. What the assessee did in calendar year 1979 was that it debited Rs. 47,417.67 to plant and machinery account and credited to general reserve account. By this method, machinery worth Rs. 47,417.67 was treated as machinery installed in this year and since no case had been paid in this year and since this item had been written off in calendar year 1976, credit was taken in general reserve. The ITO allowed depreciation on the entire value of plant and machinery which had been claimed as added during the year (Rs. 3,18,582) which included Rs. 47,417.67 introduced in above manner, we should hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is said to consist of the following: Rs. Machinery and plant 1,18,291 Machinery parts 21,285 Office equipment 2,070 Water cooler 1,250 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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