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TMI Blog1970 (2) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... es on the following facts and circumstances : The respondent was being assessed to income-tax for the assessment year 1962-63, i.e. the accounting year ending Diwali of the year 1961. The respondent is a registered firm carrying on the business of running a rice mill. On March 9, 1961, Shri Chandrashekhar, a partner of the firm, had gone from Kargi-road to Bilaspur for depositing a cheque issued to the mill by the Government. The cheque, was duly deposited and an amount of Rs. 23,000 was withdrawn in cash for disbursement at Kargi-road, which disbursement was said to be necessary for the business of the respondent. At the bus stand on his way back, Shri Chandrashekhar lost the amount as some unknown persons were said to have stolen the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in some Privy Council cases, such as in Commissioner of Income-tax v. S. M. Chitnavis wherein their Lordships were required to consider whether a bad debt was deductible as a loss in business. A Full Bench of the Nagpur Judicial Commissioner's Court in Commissioner of Income-tax v. S. M. Chitnavis had taken the view that it could not be allowed to be deducted as a loss in business. Their Lordships of the Privy Council reversed that Full Bench decision and held that the question as to when a debt becomes a bad debt, would be a question of fact to be decided by the court. The assessee's will would not be the determining factor. But, if once it is established that it is a bad debt, it could be allowed to be deducted as a loss in business. A D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness and, therefore, it was held that the said item was taxable. Their Lordships of the Supreme Court reversed that decision and held that it could be allowed to be excluded as a loss in business. With reference to the decided case their Lordships in paragraph 13 of the judgment made the following observations : " Subsequent to the decision now under appeal, the Bombay High Court had occasion to consider this question in Lord's Dairy Farm Ltd. v. Commissioner of Income-tax. On a review of the authorities including the decision in Curtis v. J. and G. Oldfield Ltd., Chagla C.J. and Tendolkar J. held that loss caused to a business by defalcation of an employee was a trading loss, and that it could be deducted under section 10(1). In Motipur S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Income-tax, and approved of the minority view of Anantakrishna Ayyar J. which was in accord with the view expressed later in the Bombay, Patna and Madras cases, which met the approval of their Lordships of the Supreme Court in Badridas Daga v. Commissioner of Income-tax . The learned authors, Kanga and Palkhivala in their Commentary on the Law and Practice of Income-tax (6th edition, 1969), volume I, at page 330, under the heading " Losses incidental to trade : Embezzlement, theft, destruction of assets, overdrawings by employees, etc., " have discussed the topic with reference to the earlier English cases as also the pronouncement of their Lordships of the Supreme Court in Badridas Daga v. Commissioner of Income-tax an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record. We may observe that it is now too late for the learned counsel for the department to challenge the statement of facts on the basis of which the Appellate Tribunal has sought an opinion. We may observe that the Income-tax Officer also had found the following facts established in the order of assessment: " Rs. 23,000 have been claimed as loss due to theft. On March 9, 1961, partner Shri Chandrashekhar withdrew Rs. 23,000 from the State Bank, Bilaspur, and went to the bus stand for catching the bus to Kargi-road. At the bus stand some unknown person snatched away Rs. 23,000 from Shri Chandrashekhar Trivedi and the culprit could not be traced out. The assessee claims that on March 9, 1961, the sale proceeds of rice were received f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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