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Issues:
Whether the loss caused by theft is an allowable deduction under section 10(1) of the Indian Income-tax Act for the assessment year 1957-58. Analysis: The judgment of the court, delivered by CHANDRA REDDY C.J., addressed the issue of whether a loss of money due to theft could be considered an allowable deduction under section 10(1) of the Indian Income-tax Act. The assessee claimed the loss, resulting from a stranger stealing cash from the business premises, as incidental to the business. The court examined previous cases to determine the eligibility of such losses as deductions. In the case of Motipur Sugar Factory v. Commissioner of Income-tax, the loss due to theft by an employee was considered incidental to the trade, as it was connected to the statutory rules governing the business operations. However, the court distinguished this case from the current scenario. Similarly, in Badridas Daga v. Commissioner of Income-tax, the Supreme Court ruled that losses incidental to the carrying on of the business are deductible. The court emphasized that only losses directly connected to the business and arising from its operations qualify as allowable deductions. Moreover, the court referenced Bansidhar Onkarmal v. Commissioner of Income-tax, where the theft was not considered incidental to the business as it occurred after business hours and was not committed by an employee during office hours. The judgment highlighted the importance of the theft being directly related to the business activities for it to be considered an allowable deduction. Additionally, in Ramaswami Chettiar v. Commissioner of Income-tax, the Madras High Court held that a loss by theft must be a probable occurrence directly linked to the business operations to be deductible. The court concluded that the loss resulting from the theft in the present case did not meet the criteria for being an allowable deduction under section 10(1) of the Income-tax Act. In light of the above analysis, the court upheld the decision of the Income-tax Appellate Tribunal, ruling against the assessee's claim for deduction of the stolen amount. The judgment concluded by answering the referred question in the negative, in favor of the department and against the assessee, without awarding any costs.
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