Skip to main content

Unascertained Business Loss Cannot Be Allowed As Deduction

Citation : Avijit Dewanjee vs The Deputy Commissioner of Income Tax, ITA No.3249/Bang/2018

Date of Judgment/Order : 23.02.2022

Court/Tribunal : Income Tax Appellate Tribunal “B” Bench : Bangalore

Corum: Shri Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member

Background

In this case, the assessee claimed a sum of Rs.2,46,36,701 as loss on account of embezzlement of cash which was done by one of the employees of the assessee. The contention of the Appellant was that the cashier while working in the assessee’s firm embezzled cash on day to day basis which came to be known in the assessment year under consideration against which assessee lodged a FIR and also charge sheet is filed and the case is pending before the Court. the loss by embezzlement by employee should be treated as incidental to the business and this loss should be allowed as deduction in the year in which it is discovered. 

Judgment

Even if the cash is kept for business purposes, the assessee should see the reasonable process of recovery of amount of embezzlement. Unless recovery is impossible, it could not be stated that it is a business loss in a commercial sense.

In the present case, till the point of time the assessee entertained the hope of recovering the loss, the said amount cannot be allowed as a deduction in this assessment year under consideration, as the assessee has not ascertained the loss in the books of account and it is shown as sundry debtors suspense account without charging it to the P&L account. At this stage, it is not possible to hold that it is ascertained liability to allow the loss as a deduction.


Comments

Post a Comment

Most viewed this month

Partition proceedings are vitiated even if single co-sharer is not made party or is not served in accordance with law

Cause Title :  Bhagwant Singh vs  Financial Commissioner (Appeals) Punjab, Chandigarh,  CWP-2132-2018 (O&M), High Court Of Punjab & Haryana At Chandigarh Date of Judgment/Order : 31.08.2022 Corum : Hon’ble Mr. Justice Sudhir Mittal Background A large parcel of land was owned by the Nagar Panchayat. Thereafter, some of the co-sharers sold their shares to third parties including the petitioners herein. On 22.11.1995, respondents No.3 to 5 filed an application for partition of the land. The petitioners were not impleaded as parties.  On completion of proceedings, sanad was issued on 28.08.1996. Vide two separate sale deeds dated 28.05.2008 respondents No.3 and 5 sold some portion in favour of respondent No.6 and 7. These respondents sought implementation of the sanad resulting in issuance of warrants of possession dated 05.06.2008. Allegedly, it was then that the petitioners realized that joint land had been partitioned and that proceedings h...
Post a Comment
Read more

Power of Attorney holder can also file cheque bounce cases: Supreme Court

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...
1 comment
Read more

Christian who reconverts as Hindu SC will get quota benefits

Amid the controversy over “ghar wapsi”, the Supreme Court on Thursday ruled that a person who “reconverts” from Christianity to Hinduism shall be entitled to reservation benefits if his forefathers belonged to a Scheduled Caste and the community accepts him after “reconversion”. Citing articles by B R Ambedkar and James Massey, and reports by Mandal Commission and Chinappa Commission, the court said: “There has been detailed study to indicate the Scheduled Caste persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward.” The bench of Justices Dipak Misra and V Gopala Gowda held that a person shall not be deprived of reservation benefits if he decides to “reconvert” to Hinduism and adopts the caste that his forefathers originally belonged to just because he was born to Christian parents or has a Christian spouse. Expanding the scope of a previous Constitution benc...
1 comment
Read more