Balancing deduction for asset confiscation fails where statutory terms are exhaustive and do not cover seizure or confiscation.

A balancing deduction under section 32(1)(iii) of the Income-tax Act is confined to cases where an asset is sold, discarded, demolished or destroyed, and the wording is exhaustive. Confiscation of a motor car by Customs was held not to fall within those terms, because confiscation is an appropriation to the public treasury by way of penalty or seizure and is not demolition or destruction of the asset. A wider commercial loss argument could not expand the statutory language. The deduction was therefore not allowable, and the issue was answered against the assessee.

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Issues: Whether confiscation of a motor car by the Customs authorities could be treated as the car being sold, discarded, demolished or destroyed so as to allow deduction under section 32(1)(iii) of the Income-tax Act, 1961.

Analysis: The provision allowing a balancing deduction on sale, discard, demolition or destruction was held to be exhaustive and to admit of no extension by analogy. Confiscation means appropriation to the public treasury by way of penalty or seizure, and it does not amount to demolition or destruction of the asset. The claimed loss could not be brought within the language of the clause, and the argument based on a broader commercial loss was outside the scope of the specific question referred.

Conclusion: The deduction was not allowable and the question was answered against the assessee.

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