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2019 (10) TMI 1060 - ITAT MUMBAIClaim of expenses / loss towards misappropriation of funds by the director - misuse of the authority by the director of the company - allowable business loss or not - HELD THAT:- As per material placed on record, we found that the claim is made on account of misappropriation of funds by the ex-director of the company. The said director misused his authority while holding the position and incurred various expenses from the company's funds which were of personal in nature. The fact that out of ₹ 95.44 lakhs, the assessee company is claiming only ₹ 55.18 lakhs proves the bonafideness of the assessee in recovering part of the money and writing off the balance. Thus we found that the aforesaid loss has incurred in the course of business of the company and therefore should be allowed as a business loss. Addition being arbitration award granted in favour of Advani group by the Arbitral Tribunal constituted by NSE - HELD THAT:- One of the procedure is by filing an arbitration claim by the parties to the dispute. Pursuant thereto Advani group filed arbitration proceedings against the assessee company for recovery of the shares belonging to the Advani group and held by the assessee company. The Arbitral Tribunal vide its order dated 13th December 2011 allowed the claim of the Advani group. In para 6 of the said Award the Tribunal has given a finding that the transaction in dispute arises from the business of the assessee company. The Tribunal directed the assessee company to pay a sum of ₹ 20,15,097/- to the Advani group along with interest of ₹ 83,959/-. The said Arbitral Award became final by the assessee company withdrawing its arbitration petition before the Hon'ble High Court on 28th August 2012 by entering into consent terms with Advani group. We direct the A.O. to allow a sum as business loss arising out of business of the assessee company. It has been very well discussed in the arbitration award under NSE Act and Rules. Accordingly the A.O. was not justified in coming to the conclusion that the said claim is not arising out of the business of the assessee company.
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