TMI Blog1992 (1) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the assessee, subject to the producion of solvent sureties to the extent of Rs. 6 lakhs. While the matter stood thus, some advocates purporting to act on behalf of the accused filed an application before the said Judicial Magistrate objecting to the release of the sum in question. Acting on the said petition, the Judicial Magistrate on 16th Nov., 1983 set aside the earlier order dt. 28th Sept., 1983 and further ordered that the sum of Rs. 5,57,404 should remain in Court custody. Thereupon the assessee filed Misc. Criminal Application No. 2014 of 1983 before the High Court of Gujarat at Ahmedabad and the Hon'ble Single Judge by his order dt. 25th April, 1984 set aside the impugned order dt. 16th Nov., 1983 of the Judicial Magistrate, leaving it open to the parties to take further action in the light of certain developments that had in the meanwhile taken place. Thereafter Misc. Criminal Application No. 712 of 1984 (in Misc. Cri. Application No. 2014/1983) was filed by the assessee. This application was disposed of by the Single Judge on 6th Aug., 1984, who directed the Judicial Magistrate to first dispose of the fresh application filed by the respondents and thereafter t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d articles and things worth Rs. 1,02,439, the assessee was entitled to revenue deduction in a sum of Rs. 4,14,656 only. 5. Aggrieved by the said decision of the CIT(A), the assessee is now before us. 6. Sri Srinivasan, the learned counsel for the assessee, took us through the facts and circumstances of the case and contended that the assessee is entitled to revenue deduction in respect of the entirety of the sum of Rs. 10,75,500. The assessee was following mercantile system of accounting; the loss by the theft arose during the previous year relevant to the asst. yr. 1984-85 now before us; and, therefore, the assessee is clearly entitled to revenue deduction in respect of Rs. 10,75,500. According to Shri Srinivasan, the facts and circumstances of the case would show that, though the sum of Rs. 5,57,404 was released to the assessee on its furnishing solvent sureties to the extent of Rs. 6 lakhs, yet, it would be difficult to predict what the final order of the Court would be. In this regard, he reiterated the fact that the case of the advocates for the accused was that the sum of Rs. 5,57,404 and the articles and things of the aggregate value of Rs. 1,02,439 seized by the police ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inivasan's alternative contention was that the assessee was entitled to a revenue deduction in a sum of Rs. 5,18,096 (Rs. 10,75,500 minus Rs. 5,57,404). 7. On his part, Shri D. Ravindran, the learned Departmental Representative, vehemently resisted the assessee's claim. He contended that there still existed good chances of recovery of the stolen money and that, therefore, it was premature for the assessee to claim full deduction. In this regard, he referred to and relied upon the following cases : CIT vs. Sugar Dealers (1975) 100 ITR 424 (All) and Associated Banking Corpn. of India Ltd. vs. CIT (1965) 56 ITR 1 (SC). Relying on certain passages occurring on page 1424 of Sampath Iyengar's Commentary on Income-tax Law, Shri Ravindran contended that the fact that the sum of Rs. 5,57,404 was conditionally released to the assessee does not matter. The fact of the matter was that pursuant to the order of the Single Judge dt. 6th Aug., 1984, which was retrospective in operation, the assessee had received the said sum and, therefore, the assessee is not entitled deduction in respect of the entire sum of Rs. 10,75,500. Another point was made by Shri Ravindran in this regard. Drawing ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amchander Shivnarayan vs. CIT 1978 CTR (SC) 5 : (1978) 111 ITR 263 (SC) the Supreme Court dealing with a case of loss by theft while money was being deposited with bank observed at page 271 of the Report as under: "It is to be remembered that the direct and proximate connection and nexus must be between the business operation and the loss. It goes without saying that a businessman has to keep money either when he gets it as sale proceeds of the stock-in-trade or for disbursement to meet the business expenses or for purchasing stock-in-trade and if he losses such money in the ordinary course of business, the loss is deductible trading loss. It is immaterial whether the money is a part of the stock-in-trade, such as, of a banking company or a money-lender, or is directed connected with the other business operations. The risk is inherent in the carrying on of the business and is either directly connected with it or incidental to it." In the light of the foregoing principles, we have no hesitation in coming to the conclusion that the assessee is entitled to revenue deduction in respect of the loss occasioned by the theft that took place in the Porbandar office. As for the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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