2006 (11) TMI 179

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... its order dated June 25, 1986, in ITA No. 440(ASR)/1985, for the assessment year 1982-83: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the order of the Appellate Assistant Commissioner for directing the Income-tax Officer to allow deduction of Rs. 2,64,795, embezzled by one Shri Kishore Hemani as trading loss for the assessment year 1985-86, .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... t 1, 1983, by the inspector (police) made it clear that there was no hope of any recovery; (ii) Payments received by Hemani were encashed through two fictitious firms; (iii) The embezzled amount was liable to be treated as trading loss for the assessment year 1985-86. On appeal by the Revenue, the Tribunal upheld the view taken by the appellate authority relying upon judgment of the hon'ble .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... see withdrew amount from bank and misappropriated the same. It was held that having regard to accepted commercial practice and trading principles, it could be held that loss arose out of carrying on of business and was incidental to it. The same principle was followed in CIT v. Nainital Bank Limited [1965] 55 ITR 707 (SC). In the said case, cash amount was stolen in a dacoity. In Ramchandar Shivna .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X