TaxTMI 
TaxTMI 
1990 (1) TMI 36
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.... section 32(1)(iii) ?" The assessee carried on business as a highway contractor. During the previous year ended on March 31, 1972, relevant to the assessment year 1972-73, the assessee sold two cars, on which depreciation had already been allowed, and this resulted in a total loss of Rs. 3,613 which in the course of the assessment proceedings was claimed by the assessee to be allowable under section 32(1)(iii) of the Act on the basis only of a profit and loss account, but the Income-tax Officer disallowed the same on the ground that the assessee had not maintained accounts. Before the Appellate Assistant Commissioner, the assessee disputed the disallowance of loss on the sale of the cars contending that it is not absolutely essential tha....
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....he Revenue contended that section 32(1)(iii) of the Act corresponds to section 10(2)(vii) of the Indian Income-tax Act, 1922, and the requirement of the proviso is that the loss should have been brought into the books of the assessee and written off and, therefore, mere write off in the profit and loss account would not entitle the assessee to claim the allowance of loss on the sale of the cars. Our attention in this connection was also drawn to the decisions in CIT v. National Syndicate [1961] 41 ITR 225 (SC), P. Appavu Pillai v. CIT [1965] 58 ITR 622 (Mad) and CIT v. Aruna Sizing Mills [1981] 127 ITR 186 (Mad). Referring to the circular relied on, learned counsel for the Revenue contended that it related to the question whether the amount....
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....ittedly, in this case, the assessee had not been maintaining any books of account at all. That was the ground on which the Income-tax Officer disallowed the claim of the assessee. Our attention has also not been drawn to any provision in the Act which requires the maintenance of certain books of account or certain specified books of account. Even so, a profit and loss account containing the figures culled from other books of account cannot be appropriately and properly called a book of account. Even on the footing that the other requirements of section 32(1)(iii) of the Act have been fulfilled by the assessee, inasmuch as the loss on the sale of the cars had not been written off in the books of account of the assessee as required in the pro....
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.... view taken in CIT v. Aruna Sizing Mills [1981] 127 ITR 186, 191 (Mad). In CIT v. Kartar Singh [1970] 77 ITR 338 (P & H), on the factual finding rendered by the Tribunal that the memorandum book produced by the assessee was a book of account and that showed the relevant entry regarding the purchase and sale of vehicles and wherein the loss had been calculated and written off within the meaning of section 10 (2) (vii) of the Indian Income-tax Act, 1922, the conclusion arrived at by the Tribunal allowing the loss was sustained. That decision, therefore, proceeded on the footing that the assessee had complied with the requirement of the proviso and it cannot, therefore, have any application to the facts of this case. CIT v. A. S. Kuppa Ammal [....
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....n Income-tax Act, 1922, laid down that in order to claim deduction of the loss sustained under that provision, one of the essential conditions to be fulfilled was that the loss should have been brought into the books of the assessee and written off as provided by the first proviso to section 10(2)(vii) of the Indian Income-tax Act, 1922. At page 234, the Supreme Court has catalogued the four conditions required to be fulfilled and the fourth condition, according to the Supreme court, to be fulfilled is that in the books of account of the assessee, the loss should have been brought in and written off. It follows, therefore, that if this requirement is not fulfilled, the assessee is not entitled to the relief of allowance of the loss. We may ....
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....ve in that the entries therein do not lead to correct assessment of the income, profits and gains of the business, that has nothing whatever to do with the allowance that can be granted under section 10(2)(vii) of the Indian Income-tax Act, 1922, if such accounts are available in which the relevant entry with regard to the allowance appears, that would be sufficient compliance with the requirement of the proviso and in that view, it was held that the details in the accounts produced in that case would be sufficient to comply with the requirements of the first proviso to section 10(2)(vii) of the Indian Income-tax Act, 1922. We may, in this connection, point out that the argument of the Revenue in that case that the profit and loss account i....