TMI Blog1970 (2) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... e opinion of this court : " Whether, on the facts and in the circumstances of the case, the sum of Rs. 23,000 is deductible in computing the income of the assessee ? " According to the Income-tax Appellate Tribunal the said question of law arises on the following facts and circumstances : The respondent was being assessed to income-tax for the assessment year 1962-63, i.e. the accounting year ending Diwali of the year 1961. The respondent is a registered firm carrying on the business of running a rice mill. On March 9, 1961, Shri Chandrashekhar, a partner of the firm, had gone from Kargi-road to Bilaspur for depositing a cheque issued to the mill by the Government. The cheque, was duly deposited and an amount of Rs. 23,000 was withdrawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l allowed the company's claim and, therefore, a reference was made to the High Court under section 149 of the English Income-tax Act, 1918. Rowlatt J. upheld the view of the General Commissioners. This view as expressed by Rowlatt J. stands approved in some Privy Council cases, such as in Commissioner of Income-tax v. S. M. Chitnavis wherein their Lordships were required to consider whether a bad debt was deductible as a loss in business. A Full Bench of the Nagpur Judicial Commissioner's Court in Commissioner of Income-tax v. S. M. Chitnavis had taken the view that it could not be allowed to be deducted as a loss in business. Their Lordships of the Privy Council reversed that Full Bench decision and held that the question as to when a debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a small portion of the amount could be recovered from the employee. Therefore, the firm claimed the written off bad debt as a loss in business. The High Court in Badridas Daga v. Commissioner of Income-tax refused to allow it as an item of loss in business and, therefore, it was held that the said item was taxable. Their Lordships of the Supreme Court reversed that decision and held that it could be allowed to be excluded as a loss in business. With reference to the decided case their Lordships in paragraph 13 of the judgment made the following observations : " Subsequent to the decision now under appeal, the Bombay High Court had occasion to consider this question in Lord's Dairy Farm Ltd. v. Commissioner of Income-tax. On a review of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the pronouncement of their Lordships of the Supreme Court in Commissioner v. Income-tax v. Nainital Bank Ltd., which was a case of a bank robbery. In this case their Lordships rejected the majority view in the Full Bench case of Ramaswami Chettiar v. Commissioner of Income-tax, and approved of the minority view of Anantakrishna Ayyar J. which was in accord with the view expressed later in the Bombay, Patna and Madras cases, which met the approval of their Lordships of the Supreme Court in Badridas Daga v. Commissioner of Income-tax . The learned authors, Kanga and Palkhivala in their Commentary on the Law and Practice of Income-tax (6th edition, 1969), volume I, at page 330, under the heading " Losses incidental to trade : Embezzl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no material on record of this case to come to the conclusion that the facts were as stated by the Tribunal in its order of reference. Therefore, the suggestion was that the Tribunal has made a reference on a hypothesis which is not supported by the material on record. We may observe that it is now too late for the learned counsel for the department to challenge the statement of facts on the basis of which the Appellate Tribunal has sought an opinion. We may observe that the Income-tax Officer also had found the following facts established in the order of assessment: " Rs. 23,000 have been claimed as loss due to theft. On March 9, 1961, partner Shri Chandrashekhar withdrew Rs. 23,000 from the State Bank, Bilaspur, and went to the bus sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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