TMI Blog1990 (3) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... propriated by the directors of the company should not be treated as business loss in computing the income of the applicant ? (3) Whether the Tribunal was right in law in holding that the assessee had not established that it has incurred the loss ?" The references relate to six years 1968-69 to 1973-74. The respondent is the Revenue. In July, 1976, the business premises of the assessee (a private limited company) as well as the residence of some of its directors were raided by the Revenue. Certain documents and letters were seized. statement was recorded from Mr. Damodaran Nambiar (a resident director). These letters and documents, as also Mr. Nambiar's statement, clearly revealed that the assessee had earned profit, which was not brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs under section 147(a) were warranted since the company failed to disclose truly and fully all material facts necessary for the assessments. Adverting to the alternate contention, the Tribunal held that after the income was earned by the company, it was either taken away by Yakub Sagar Abdulla or it was distributed to some other persons in Calicut under his directions. Once the income was earned by the company, it was assessable in its hands. The unauthorised appropriation by Yakub Sagar Abdulla cannot, in any way, deter the company from taking steps for getting restitution and it cannot be stated that any legal action was taken against him for recovery of the amount. The Tribunal further held that no loss was incurred by the company. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... centred round question No. 2. Counsel pleaded that once it is evident that the company had not the benefit of such unaccounted profit, which was diverted away by one of the directors, Mr. Yakub Sagar Abdulla, the said amount should be construed as business loss of the company. In this connection, our attention was drawn to the decision of the Supreme Court in Associated Banking Corporation of India Ltd. v. CIT [1965] 56 ITR 1 and the passages at page 12 of the report. The plea was that the amounts so lost should be equated to an embezzlement by an agent and it should be treated as a permissible business loss. We are unable to accept this plea either. It is clear that income was earned by the company. It was assessable in its hands. It may ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
