Transfer of depreciable machinery on delivery upheld, allowing short-term capital loss despite deferred balance consideration.

Where depreciable business machinery forming part of a block of assets was sold under agreements, with possession delivered and part consideration received during the year, the transfer was treated as completed for tax purposes even though the balance price was received later. For movable property, delivery effects transfer and the unpaid balance remains recoverable as a debt. On these facts, the resulting short-term capital loss was allowable, and disallowance of the claim was unsustainable.

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Issues: Whether the assessee was entitled to claim short-term capital loss on sale of depreciable business machinery, where possession had been delivered and part consideration had been received, despite balance sale consideration being received in the subsequent year.

Analysis: The assets sold were business machinery forming part of the block of assets on which depreciation had been claimed. The transaction was supported by sale agreements, part consideration was received during the year, and possession was handed over to the buyers. For movable property, transfer is effected by delivery, and the assessee's remedy for any unpaid balance is recovery of the remaining consideration. On these facts, the sale stood completed in the relevant year and the resulting loss was allowable as short-term capital loss.

Conclusion: The disallowance of short-term capital loss was unsustainable and the assessee succeeded on the issue.

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