Nectar Beverages Pvt. Ltd vs Deputy Commnr. Of Income Tax

The Supreme Court addressed whether the concept of 'balancing charge' under Section 41(2) of the Income Tax Act, 1961, could be applied to Section 41(1) after the former was deleted effective from assessment year 1988-89. The Court held that the deletion of Section 41(2) precludes the Department from taxing the proceeds from the sale of fully depreciated assets under Section 41(1) as business income. Consequently, the appeal was allowed, ruling that the Department was not entitled to tax the amount in question.