Business use for demolition loss deduction was not met, so the claim failed

Deduction for loss on demolition and sale of hutments and a labour camp was available only if the asset was used for the business or profession in the relevant assessment year. Prior use in earlier years was insufficient where the record did not show business use in the year of claim. On the facts, the Tribunal found that the hutments had not been used as dwelling houses for workers from an earlier year onward, and no basis existed to infer use in the year in question. The deduction was therefore not allowable, and the issue was answered against the assessee.

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Issues: Whether the assessee was entitled to deduction of the loss arising from demolition and sale of hutments and labour camp under section 32(1)(iii) of the Income-tax Act, 1961, when the asset was not shown to have been used for the business in the relevant assessment year.

Analysis: The Tribunal found that the hutments had not been used by the assessee as dwelling houses for workers from an earlier assessment year onward, and there was no basis to assume business use in the year in question. The deduction under section 32(1)(iii) was treated as available only where the asset was used for the business or profession in the assessment year in which the loss was claimed, and prior use in earlier years was held insufficient.

Conclusion: The claim for deduction was not allowable and the question was answered in the negative, against the assessee.

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