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| DATE: | April 4, 2014 (Date of publication) |
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| Click here to download the judgement (crompton_advance_loss.pdf) |
Write-off of irrecoverable advances is not a “transfer” and the loss cannot be claimed as a capital loss u/s 45
Having regard to the definitions of terms “capital asset” and “transfer” in sections 2(14) and 2(47), in order to be eligible for carry forward of capital loss, the capital asset should be of the nature defined in s. 2(14) and should be transferred in the manner defined in s. 2(47). Equally, it should be subjected to tax as per s. 45(1) of the Income-tax Act. The advances given to the said two parties and written off are not the capital assets nor there is any transfer. Therefore, they were not allowed to be carried forward to subsequent years. It is a capital loss and should be ignored (Ahmed G.H. Ariff 76 ITR 471 (SC) & Minor Bababhai 128 ITR 1 (Guj) distinguished)
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