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2017 (10) TMI 1144 - AT - Income TaxAllowance of loss incurred on account of theft of jewellery - claim made to the insurance company had been rejected - Held that:- Hon’ble Jurisdictional High Court in the case of G. G. Dandekar Machine Works Ltd. vs. CIT [1993 (1) TMI 40 - BOMBAY High Court] has clearly held whether any loss from theft, dacoity, embezzlement, etc., is deductible or not, what is material is whether the loss incurred by theft, dacoity, etc., is incidental to the carrying on of the business. It does not make much difference whether such act is committed by the employees of the assessee or by strangers. It is difficult to draw a distinction between embezzlement of the amount from the bank and theft of the amount from the cash box of the businessman from his sales counter or business premises. What is material is whether the loss was caused to the assessee in the course of his business activity. In the case of Badridas Daga vs. CIT (1958 (4) TMI 2 - SUPREME Court), the Hon’ble Apex Court took a view that loss resulting from embezzlement by an employee or agent in a business is admissible as a deduction under section 10(1) of the Indian Income-tax Act, if it arises during the course of carrying on of the business and is incidental to it. This is a case where theft has taken place in respect of the trading asset of the assessee and during the course of carrying on the business by it. Merely because the insurance company has not compensated the assessee and did not accept the claim of the assessee does not mean that the assessee has not incurred loss or theft has not taken place. We, therefore, confirm the order of the CIT(A) and dismiss the appeal of the Revenue
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