Suyog Electricals Ltd. Vs DCIT (ITAT Ahmedabad)
Book Profit on Sale of Car Cannot Be Taxed Separately Once Sale Value Is Reduced from Block — Double Taxation Deleted Under Sec. 32 r.w.s. 43(6)(c)
In this appeal, Suyog Electricals Ltd. challenged the addition of ₹4,83,894/– treated as “profit on sale of fixed asset (vehicle)” brought to tax by the AO & confirmed by NFAC. The Assessee had originally filed return declaring income of ₹17.39 crore, later revised to include all entries. The case was selected for Limited Scrutiny on a completely different issue—expenditure by way of penalty/fine. The AO accepted the returned figures but while generating the computation sheet, assessed income became ₹17,43,90,590/– due to automatic inclusion of book profit on sale of vehicle.
Before CIT(A), the Assessee explained that the sold motor car formed part of the block of assets (Motor Cars – 15%). The sale consideration of ₹5,60,000/– had already been reduced from the block in accordance with Section 43(6)(c) & Rule 5. Since the net book value in books was ₹76,106/–, an accounting profit of ₹4,83,894/– arose, which was credited to the P&L as per accounting standards—but this profit was already neutralised in tax computation by reducing it from business income, consistent with the block-of-asset concept.
CIT(A) dismissed the claim stating that no revised computation or supporting reconciliation was placed before him.
Before Tribunal, the Assessee produced the ITR depreciation schedule showing reduction of ₹5,60,000/– from the block and the vehicle ledger accounts. Tribunal noted that:
