TMI Blog1962 (10) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... agency of Tata Mercedes Benz. It would appear that a stranger came to the assessee's shop during business hours, sat down near the cash box and was talking to him. Just then, he had to go into another room to talk on the telephone. Taking advantage of this situation, the stranger is said to have removed the cash from the cash box and disappeared with it. The assessee claimed this loss under section 10(1) of the Indian Income-tax Act as an allowable deduction as incidental to the carrying on of the business. This was disallowed by the revenue. The appeals carried by the assessee to the Appellate Assistant Commissioner and the Tribunal proved unfruitful. However, at the request of the assessee, the Income-tax Appellate Tribunal refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to set up purchasing centres and to locate weigh-bridges for the purchase of sugarcane. The assessee company was also bound to purchase sugarcane at these weighment centres and to make payment to the sugarcane cultivators within a fortnight of the date of weighment. It is thus seen that sending money through an employee for the purpose of distribution among the sugarcane growers was an incident of business. It is in such a situation that the learned judges treated the loss as directly connected with the business and as such it was a trading loss. That decision has no parallel here. Nor does Badridas Daga v. Commissioner of Income-tax [1958] 34 I.T.R. 10; [1959] S.C.R. 690 come to the rescue of the assessee. There, the assessee was money- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. If employment of agents is incidental to the carrying on of business, it must logically follow that losses which are incidental to such employment are also incidental to the carrying on of the business. Human nature being what it is, it is impossible to rule out the possibility of an employee taking advantage of his position as such employee and misappropriating the funds of his employer, and the loss arising from such misappropriation must be held to arise out of the carrying on of business and to be incidental to it. The principle underlying this decision, therefore, is that it is only such losses as are incidental to the carrying on of the business that should be claimed as allowable deductions. His Lordship observed that the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shop and after opening the iron safe removed ₹ 8,995 (leaving behind the balance) out of which ₹ 320 was later on recovered from him and it is the balance of ₹ 8,675 which was claimed as business loss. This was disallowed by the concerned Income-tax Officer, which was upheld by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal. In a reference under section 66(1) of the Indian Income-tax Act, the Orissa High Court agreed with the view of the department and of the Appellate Assistant Commissioner and answered the reference against the assessee. It was ruled that the assessee was not entitled to claim deduction for the reason that the theft which occurred after the close of the shop was not committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. In Ramaswami Chettiar v. Commissioner of Income-tax* a Full Bench of the Madras High Court took the view that the loss which occurred by theft of money used in the money-lending business was not an allowable deduction where the theft was committed by persons who were not at the time of the offence employed as clerks or servants in the business of the assessee. Curgenven J., one of the members of the Full Bench who agreed with Beasley C.J. in disallowing the claim of the assessee, observed, inter alia, as follows: To recognise it we must, I think, find not only that the cash had to be kept on the premises, but that its loss by theft was a circumstance which was so far probable as to be an occurrence incidental to, if not ins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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