1. This appeal of the assessee is directed against the order of the CIT(A)-XXXVII, Bombay, dt. 15th Jan., 1997, for asst. yr. 1992-93.
2. Ground No. 1 is not pressed by the learned counsel of the assessee, hence dismissed.
"CIT(A) erred in upholding the disallowance of Rs. 8,66,989 under Section 32AB of the IT Act in respect of unserviceable and unusable JCB excavator loader scrapped during the accounting year and the scrap value deducted from the block of assets under Section 32 of the Act and as such the deduction be allowed under Section 37 of the Act as a matter of commercial expediency as a prudent businessman would do." 4. The learned counsel for the assessee argued that the assessee had purchased JCB excavator loader in the year 1987 relevant to asst. yr.
1988-89, but the assessee found the same unserviceable and unusable.
Accordingly, the assessee substituted the same by purchasing another loader in the relevant accounting period and the unserviceable JCB excavator loader was sold as scrap during the year. He argued that the assessee was unable to carry on his business without purchasing a new loader and the decision to substitute the unserviceable loader was taken by the assessee in accordance with the commercial expediency and, therefore, has to be allowed as a deduction. The learned counsel argued that the Revenue authorities have taken a narrow interpretation of the whole issue.
5. The learned Departmental Representative argued that in accordance with the provisions of law, the asset purchased has to be used for eight years and if sold prior to that it has to be taxed. He argued that the plea of substitution of old loader by a new one was not taken by the assessee before the CIT(A) or the AO.6. We have considered the rival submissions. We find that this is the case of substitution of old and unserviceable loader by a new loader.
The assessee has taken the decision as a prudent businessman to substitute the unserviceable loader with a new one in its business interest. The purchase of a new loader is not doubted by the AO. The nature of business is manufacture of phosphorous, which is highly explosive and it is claimed that the loader is a necessity in the line of trade. In accordance with the provisions of Section 32AB of the IT Act, 1961, the deduction was allowed to the assessee on the purchase of JCB excavator loader but it does not imply that the assessee is not allowed to substitute the unserviceable asset with a new one within a period of eight years in order to get investment relief. The provision of law is to be interpreted in accordance with its substance and purpose of the provision, and any interpretation so as to defeat the very purpose of the enactment should be avoided. The plea of the learned Departmental Representative that the plea of substitution of unserviceable asset was not taken before the AO or the CIT(A) by the assessee is not sustainable since the depreciation chart giving all the details of addition, sale of asset was filed along with accounts statement of income by the assessee. In view of these facts we decide the issue in favour of the assessee, and the ground of appeal is allowed.
"CIT(A) erred in treating the short-term capital loss of Rs. 1,81,864 as speculation loss in the case of the appellant-company, being a manufacturing company." 8. The learned counsel for the assessee argued that due to market fluctuation the assessee sold shares and the assessee being manufacturing company has been wrongly denied the benefit of short-term capital loss by holding the same as speculation loss. The learned Departmental Representative argued that no delivery was taken or given in this case and, therefore, has been rightly held as speculation loss.
9. We have considered the rival submissions. We find that no payment was made in respect of purchase price of these shares and admittedly no delivery of shares was taken by the assessee. In these facts and in the absence of any material before us to contradict the findings of the CIT(A) in this regard, we hold that no interference is called for in the order of the CIT(A). Accordingly, we uphold the order of the CIT(A) and dismiss this ground of appeal of the assessee.