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TMI Blog1967 (12) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal has found that a theft was committed on November 10, 1957, at 3 o'clock of the morning in the factory premises of the assessee and a sum of Rs. 75,031 was stolen. A certain amount was recovered from the thieves, who included an employee of the assessee, but the sum of Rs. 53,121 remained untraced. It accepted the case of the assessee that large sums of money were necessary at the factory for conducting its day to day business, that on the eve of commencing sugarcane crushing, a large sum in cash had to be kept available at the factory for despatching funds to different centres to enable the purchase of sugarcane and for meeting other expenses, and the money had to be kept in the safe-room at the factory as the bank was situated abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Badridas Daga v. Commissioner of Income-tax in the following terms : "...... when a claim is made for a deduction for which there is no specific provision in section 10(2), whether it is admissible or not will depend on whether, having regard to accepted commercial practice and trading principles can be said to arise out of the carrying on of the business and to be incidental to it. If that is established, then the deduction must be allowed, provided of course there is no prohibition against it, express or implied, in the Act. " Therefore, we are here concerned with the question whether the loss of Rs. 53,121 can be said to arise out on the carrying of the assessee's business and to be incidental to it if regard be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal to form part of the fund maintained for business expenses. There is no material, so far as we know, that the profits earned in the business formed part of that fund. Nor is there any suggestion that any part of the fund was diverted to expenditures not connected with the assessee's business. In Badridas Daga's case , the Supreme Court held that a loss resulting from embezzlement by the agent of a firm who enjoyed large powers of management including authority to operate on bank accounts, and who withdrew the moneys in the purported exercise of that authority, was a loss incidental to the carrying on of the business and should therefore be deducted in computing the profits under sub-section (1) of section 10. To the same effect is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Nainital Bank Ltd., a public limited company, carried on the business of banking. At 7 o'clock an evening in June, 1951, there was a dacoity in the bank resulting in the removal of a large amount of cash kept in the safes at a branch at Ramnagar. The bank claimed a deduction of the amount in the computation of its business profits under sub-section (1) of section 10. The claim was resisted by the revenue, one of the submissions being that the loss was suffered after business hours and was, therefore, not incurred in the running of business. It was urged that the loss was one to which all owners of properties are exposed, whether they do business or not. Reliance was placed on a passage in Badridas Daga's case, which appeared to support th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eft, dacoity or destruction by fire and such other things. Such risk of loss is incidental to the carrying on of the operations of the business of banking. " Here, in the instant case, we have an assessee who finds it necessary for the purposes of its business to withdraw from the bank and lodge in the factory safe-room a sufficient amount of money for paying out to canegrowers and for meeting other business expenses. There is no mixing of the money with profits earned by the assessee or with private funds. It is money appropriated, as it were, to business expenditure. It is money which, upon withdrawal from the bank, has been put into movement for payment ultimately in discharge of the business liabilities of the assessee. The lodging of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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