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2018 (4) TMI 1555 - AT - Income TaxDisallowance on account of expenses claimed against animal breeding and co-operative development expenses etc. - nature of expenditure - revenue or capital - Held that:- Test for allowance of expenditure u/s 37 is enough to show that; the money was expended out of necessity and with a view to direct a minimum benefit to the trade, but voluntarily and on the ground of commercial expediency and in order to facilitate directly or indirectly the carrying on of the business. In deciding whether the payment of money is a taxable expenditure or otherwise one has to take into consideration not only; the commercial expediency but also the principles of ordinary commercial trading and legitimate commercial necessity for incurring such expenses. Incurring of expenditures are directly benefited to the appellant more than one way besides increase in turnover and income. Thus it can be said that this expenditure on account of reimbursement of member unions against co-co. development expenses and expenses towards fertility improvement programme are wholly and exclusively for the purpose of business of the appellant and, therefore, the A.O. is not correct in making - addition of this amount to the total income of the appellant for the year under consideration. Disallowing of business loss - misappropriation/embezzlement of sale proceeds of milk by its employees - Held that:- The correctness of the version of the assessee that misappropriation/embezzlement of sale proceeds has irretrievably happened is not corroborated by action taken by the assessee thus far. The assessee has neither recognized the sale proceeds as not recoverable nor has initiated any criminal action against the identifiable employees for claiming net of embezzlement on account of misappropriation etc. The assessee has failed to throw light as to what happened in the subsequent years till today on this score. Therefore, the narrative of the assessee to claim such whopping loss does not inspire any confidence. The onus for justification of claim is on assessee. The assessee has totally failed to discharge onus. We thus find that the impugned action of the AO and CIT(A) in disallowing such business loss is on a sound footing.
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