TMI Blog2008 (3) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... d was lost due to dacoity. It was further stated that during the relevant time, the business was being carried on by one Umesh Chand Gupta as his proprietary business and later on the business was taken over by the assessee-company with the said Umesh Chand Gupta as one of the directors. It was pleaded that the business of the proprietary concern having been taken over by the assessee-company along with the losses, assets and liabilities, the loss of Rs. 60 lakhs was allowable in the hands of the assessee-company. To complete the record, it may be added that the loss was debited to the profit and loss account for the year ended March 31, 2001, under the head "Administrative and other expenses". Apparently, there was a sub-head to this main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pta and, therefore, the same cannot be allowed as a deduction in the assessee-company's hand. Thereafter, he proceeded to make certain observations to the effect that the money stolen from Madan Jain's residence appears to be his unaccounted money and so on but with these observations, we are not concerned in the present appeal. The Commissioner of Income-tax (Appeals) having thus upheld the disallowance the assessee is in further appeal before the Tribunal. The learned representative for the assessee drew our attention to the main object of the assessee-company according to its memorandum of association, which was to acquire and take over the business with all its assets from Umesh Chand Gupta who was carrying on the business under the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee-company from Balaji Enterprises of which Umesh Chand Gupta was the proprietor, the same has to be allowed in the assessee-company's assessment. At our insistence, the extracts from the cash book maintained by Umesh Chand Gupta from January 1, 1999 to January 10, 1999, were furnished before us. We have perused the same and found that Umesh Chand Gupta was maintaining substantial cash balance everyday and the same was being deposited in the bank on the following day. We further find that Madan Jain was given some commission on sales and entries to this effect are found on January 6, 1999. On the same day, the last entry is of handing over the amount of Rs. 60 lakhs to Madan Jain. This runs contrary to the affidavit in which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been satisfied. The amount represented money handed over to Madan Jain for being deposited into the bank. It was not a debt which arose in the course of the business of Balaji Enterprises. The amount of Rs. 60 lakhs also does not represent money lent either by Balaji Enterprises or by the assessee in the course of banking or money-lending business. The assessee does not carry on any such business nor did Balaji Enterprises carry on such business. Since the conditions of section 36(2)(i) of the Income-tax Act have not been satisfied the advance of Rs. 60 lakhs cannot be successfully claimed as bad debts written off. The alternative claim that the amount has to be allowed as a business loss under section 28 of the Act as loss incidental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basic postulates of the income-tax law and, therefore, cannot be countenanced. No direct decision in support of the assessee's plea has been brought to our notice by the assessee. The judgments which have been compiled in the assessee's paper book filed on February 14, 2008 are cases of debts taken over by an assessee from another entity. Even these cases are not applicable, as we have already seen that the conditions of section 36(2) (i) have not been satisfied in the present case, whereas in the decided cases such conditions were found to be satisfied. No case was cited in support of the proposition that a business loss of one entity can be carried forward and adjusted against the profits of an entirely different entity. The cases liste ..... X X X X Extracts X X X X X X X X Extracts X X X X
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