TaxTMI 
TaxTMI 
2025 (8) TMI 193
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....f Rs. 56,79,558/- being loss on sale of assets. 3. The assessee craves leave to add, alter or amend the above grounds of appeal." 3. The brief facts of the case are that the assessee during the impugned assessment year claimed expenditure, paid by way of penalty or fine related to interest and penalty on delayed payment of Central Sales-tax, interest& penalty on non-fulfillment of advance license obligation and interest on delayed payment of GST which was total amount of Rs. 52,34,554/-. The details of the expenses incurred with item-wise list is as follows: - Sr.No. Expenditure by way of penalty or fine for violation of any law for the time being force Amount (Rs.) 1 Interest on delayed payment of value added tax and central sales tax 12,53,782 2 Penalty on delayed payment of value added tax and central sales tax 29,589 3 Interest on non-fulfillment of advance license obligations 38,77,770 4 Penalty on non-fulfillment of advance license obligations 73,175 5 Interest on delayed payment of Goods and Services Tax 238 3.1 Out of the above payment, item at serial No.2 related to Penalty on delayed payment of value add....
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....red CNG cylinders as per scheduled formula and if the assessee does not fulfill the obligation to export, the assessee was liable to pay interest and penalty for such non-fulfillment of advance license obligations. The assessee relied on the order of the Hon'ble Delhi High Court in case of CIT vs Enchante Jewellery Ltd 40 taxmann.com 216 and the order of the Hon'ble Gujarat High Court in case of CIT vs Tarun Commercial Mills Co. Lt 107 ITR 172 (Gujarat) where the Hon'ble Gujarat High Court ruled that where there was no breach of a public policy which might render payment, agreed to be made for default arising as a result of breach as one akin to penalty or infraction of law and hence amount paid by the assessee for non-fulfillment of export obligation was allowable as business expenditure. Accordingly, we follow the order of the Hon'ble Delhi High Court and Hon'ble Gujarat High Court and the interest and penalty on non-fulfillment of advance licence obligation amount to Rs. 38,77,770/- and Rs. 73,175/- respectively are allowable expenditure under section 37(1) of the Act. The Ld.DR was unable to bring any contrary judgement to refute the argument of the Ld.AR. Accordingly, the e....
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....in that block, which is sold or discarded or demolished or destroyed during that previous year. So, once the sale price is already reduced from the WDV, the appellant cannot claim it as a loss. Also, for the sake of clarity, Section 37 provides that an expense of capital nature shall not be allowed as a deduction. Therefore, the loss on the sale of fixed assets is a capital loss and accordingly not allowed as a deduction. The combined reading of Section 43(6)(c)(i) and Section 37 clearly indicates that the sale price of fixed assets has to be reduced from WDV and cannot be claimed as an expenditure. Therefore, the appellant arguments cannot be accepted. Hence, the loss of Rs. 56,79,598/- disallowed by the AO (CPC) does not require any interference. Thus, the sum of Rs. 56,79,598/- is confirmed." 8. The Ld.AR in argument and placed that where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of assets during the previous year, exceeds the aggregate of the following amounts, namely: ....
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....be applicable. The Hon'ble Supreme Court in the case of CIT V/s. J. H. Gotla, 156 ITR 323 (SC) has held that the word "income" includes "loss". Therefore, if the sales consideration of assets falls short of WDV of assets, the balance being loss is to be considered for the purpose of allowance under section 41(2) of the Act. This analogy squarely applies to the provisions of section 50 as well which only provides for short term capital gain where the full value of consideration is in excess of WDV etc. It does not provide for the converse situation. But as the word "income" includes loss the short term capital loss falls within the purview of section 50 as well. As the provisions of section 41(2) and section 50 coexist, an assessee can take the benefit of section 41(2) which is more beneficial to him. The Supreme Court in the case of CIT vs. Urmila Ramesh (1998) 230 ITR 422 (SC), has held that both section 41(2) and section 50 of the Act cannot apply to the same amount. 10. The Ld.DR vehemently argued and relied on the order of the revenue authorities. The Ld. DR was unable to bring any contrary judgement to refute the argument of the Ld.AR 11. We have carefully consider....
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....to assessee who is engaged in the business of manufacturing and exporting of CNG Cylinders. Section 41(2) provides 3 (three) conditions for the purpose of applicability of the said section. The conditions are. (a) Building, machinery, plant or furniture is owned by the assessee; (b) Depreciation is claimed under clause (i) of sub-section (1) of section 32; and (c) Building, machinery, plant or furniture was or has been used for the purposes of business Therefore, one of the conditions for applicability of section 41(2) is that the assessee should have claimed depreciation under section under clause (i) of sub-section (1) of section 32 which reads as under - "32. (1) In respect of depreciation of- (i) buildings, machinery, plant or furniture, being tangible assets. (ii) know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, not being goodwill of a business or profession, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following dedu....