Balancing allowance for partial demolition permitted where writing-off in books was not reasonably possible, subject to factual assessment.

Clause (vii) of section 10(2) grants a balancing allowance where part of a building is demolished; statutory language and analogy with machinery support inclusion of partial demolition, so the allowance may be claimed for the demolished portion. The proviso that the amount be "actually written off in the books" is a qualifying term, not an absolute condition precedent; the assessing officer may grant the balancing allowance where factual findings show it was not reasonably possible to write off the amount despite proper efforts. Outcome: partial demolition qualifies and the proviso permits discretion on the facts.

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Issues: (i) Whether clause (vii) of section 10(2) of the Income-tax Act, 1961 applies where only a part of a building is demolished; (ii) Whether the proviso "Provided that such amount is actually written off in the books of the assessee" to clause (vii) of section 10(2) operates as a condition precedent which, as a matter of law, disentitles an assessee to the balancing allowance whenever the amount is not actually written off in the books.

Issue (i): Whether clause (vii) of section 10(2) applies when only part of a building is demolished.

Analysis: Clause (vii) grants a balancing allowance in respect of any building, machinery or plant which has been sold, discarded, demolished or destroyed. The clause is framed in the same terms for buildings, machinery and plant; machinery and plant are commonly discarded piece-meal and the statutory language must accommodate partial disposals. The context and parallel use of terms (including "destroyed") show the legislature intended the words to cover destruction or demolition of part as well as whole. Authorities on machinery support that parts of machinery fall within "machinery" and analogous construction applies to "building" in this clause.

Conclusion: Clause (vii) of section 10(2) includes demolition of a part of a building; the balancing allowance may be claimed in respect of the portion demolished.

Issue (ii): Whether the proviso requiring that the amount be "actually written off in the books of the assessee" is an absolute condition precedent that, as a matter of law, bars the allowance whenever the amount is not so written off.

Analysis: The proviso must be read in the context of section 10(2) and compared with other provisos (for example clause (vib)) where the legislature used unequivocal language to make non-fulfilment a ground for denial ("no allowance under this clause shall be made unless"). Clause (vii)'s proviso uses different language and functions as a qualification or term of the allowance rather than an absolute condition precedent. The statutory scheme permits the assessing officer to consider the surrounding facts and circumstances; where, on the facts, it is impossible for the assessee to have written off the amount in the books (for reasons beyond the assessee's control), the proviso does not automatically bar the allowance. Authorities discussed indicate that failure to make entries may permit disallowance in appropriate cases, but do not establish an inflexible rule of law denying the allowance in every case of non-entry.

Conclusion: The proviso does not operate as an absolute condition precedent in every case; where the assessing officer is satisfied that the amount could not, despite proper efforts or due to circumstances, be written off in the books, the balancing allowance may still be granted.

Final Conclusion: The Court held that (i) a part-demolition of a building falls within clause (vii) of section 10(2) and (ii) the proviso requiring actual writing off in the books is a qualification permitting discretion in circumstances where writing off was not reasonably possible; accordingly the assessee's claim was allowable on the facts.

Ratio Decidendi: For the purposes of section 10(2)(vii) of the Income-tax Act, 1961, "building" includes part of a building demolished and the proviso requiring that the amount be actually written off in the books is a qualifying term rather than an absolute condition precedent; where factual findings establish that writing off in the books was not possible for reasons beyond the assessee's control, the assessing officer may grant the balancing allowance.

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