9911796707
TMI Blog2009 (8) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) Central-I erred in upholding the action of the Assessing Officer by rejecting the appellant's claim of business loss on account of embezzlement amounting to Rs. 3,92,15,599. The Assessing Officer may be directed to allow the said loss amounting to Rs. 3,92,15,559 in the year under appeal under section 28 or 37 of Income-tax Act, 1961." 3. The brief facts of the case are that the assessee-company before us was incorporated on 5-9-1994 as a result of joint venture between Aditya Birla Group and Sunlife Financial Services of Canada. The share capital of the company is owned equally by Birla Global Finance Ltd. and Sunlife (India) AMC Investments Inc. Canada, which in turn is the wholly owned subsidiary of Sunlife Financial Services Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter thereafter was sub judice before the Court and had not attained finality. The CIT(A) also noted that the case laws relied upon by the assessee were in respect of embezzlement committed by the employees of the company, but in the instant case, it was not a case of embezzlement done by any of the employees and hence ratios were not applicable. The CIT(A) admitted it to be a fraud committed on assessee by an outsider by making forged claims but the same was held to be not done in the normal course of business carried on by the assessee and as such the claim was disallowed. 4. The assessee is in appeal before us in respect of the claim of deduction of Rs. 3.92 crores. The learned A.R. for the assessee after taking us through the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offering portfolio management services and it was managing the services of M/s. TIFPL. However, the loss incurred was on account of lapses on the part of the Registrars. Our attention was invited to page 51 of the paper book where under SEBI Regulations, it has been provided that the asset management company is responsible for the acts of commission or omission by its employees or persons whose services had been procured by the asset management company. 5. The learned D.R. for the revenue relying on the order of the CIT(A) pointed out that any loss suffered would be reflected in the value of units, which in turn would be passed on to the investors. 6. We have heard the rival submissions and perused the record. The principal activity carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents were sent for forensic report to verify the signature and it was revealed that signature of Shri Sushil Agarwal, Managing Director of M/s. TIFPL was forged. The assessee also filed a complaint with Banking Ombudsman against the IDBI bank for recovery of loss due to fraud committed on the assessee-company. However, the Banking Ombudsman negatived the claim of the assessee and asked the assessee to pursue the matter with appropriate forum. Pursuant to the police complaint, the matter was investigated and the people involved were identified and were arrested. In the criminal complaint, charge sheet had been filed and the matter is sub judice before the court. As the discovery of the embezzlement was made during the year, the claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee also filed a complaint with Banking Ombudsman on 29-9-2003 and copy of which is filed in pages 17 to 25 of the paper book. A copy of the bank account wherein cheque of Rs. 3.65 crores was deposited and the money withdrawn is enclosed at page 25 of the said complaint. Photocopy of the cheque for Rs. 3.65 crores issued by Citi Bank is enclosed at page 26 of the paper book. The SEBI had issued a circular to all mutual funds registered with SEBI Association on 1-3-2004, wherein it has been stipulated that the bank account number and PAN from investors is required to be disclosed for redemption of units. The letter dated 4-4-2003 addressed by the assessee to SEBI informing about the fraud committed is enclosed at page 33 of the paper book. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee before us was handling units worth of Rs. 7.5 crores belonging to M/s. TIFPL. The said units were redeemed by the assessee in February, 2003 and March, 2003. The redemption in February, 2003 appears to have been made in the name of M/s. TIFPL, a cheque was also issued in the name of M/s. TIFPL and the same has also been cleared in the name of M/s. TIFPL. The second redemption in March, 2003 has been credited to the account of M/s. TIFPL. However, in respect of the redemption in February, 2003, the claim of M/s. TIFPL is that the funds have not been received by the said company in exchequer, as no claim for redemption was made in February, 2003 by the company. However, we find that the assessee who is the Portfolio Manager of M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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