2005 (10) TMI 232 - AT - Income Tax

Tribunal allows appeal on livestock write-off, grants deduction under

The Tribunal allowed the assessee's appeal challenging the disallowance of livestock written off, setting aside the impugned order. The assessee ... Animals Issues:Appeal challenging disallowance of livestock written off.Analysis:The assessee appealed against the disallowance of livestock written off by the Assessing Officer and confirmed by the CIT(A). The assessee argued that the CIT(A) erred in not considering their submissions and amendments to section 43(3) while upholding the disallowance. They contended that the decision to treat parent and grandparent birds as capital assets and disallow the write-off was incorrect. The revenue representative countered by stating that the asset's business use was not claimed before and should be verified by the Assessing Officer. The Tribunal analyzed the submissions and evidence provided. The assessee demonstrated through annual accounts and depreciation schedules that the birds were used for business purposes, leading to substantial sales. The Tribunal noted that the Department did not dispute this fact. The Tribunal also referred to relevant case law to support the assessee's claim that the birds' destruction qualified for deduction under section 36(1)(vi).The revenue argued that the relief under section 36(1)(vi) was not applicable to birds or chickens as they were not classified as animals. However, the Tribunal referred to a Delhi High Court decision that clarified birds as animals for legal purposes. The revenue also contended that the birds were not dead but destroyed, thus not meeting the provision's criteria. The Tribunal highlighted that the provision allowed for cases where assets became permanently useless for business purposes. The Tribunal further cited legal commentary supporting the allowance of losses in cases where assets became permanently useless for business, strengthening the assessee's position.The Tribunal rejected the revenue's suggestion to remit the matter to the Assessing Officer for verification, noting that the evidence of business use was already provided in the Balance Sheet. The Tribunal emphasized that the relief under section 36(1)(vi) required the animals to be used during the accounting year for business purposes. Considering all facts, legal provisions, and case law, the Tribunal granted relief to the assessee by setting aside the impugned order. Additionally, a ground regarding the disallowance of PF and ESI delayed payments was rejected due to lack of arguments during the hearing. Ultimately, the appeal of the assessee was allowed in part.