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Issues:
- Whether the sum of Rs. 12,000 was an admissible deduction in working out the assessable income for the assessment year 1961-62? Analysis: The judgment pertains to a case where the assessee, a commission agent, claimed a deduction of Rs. 12,000 in the assessment year 1961-62. The amount was handed over to an employee for deposit, but it was reported stolen. The Income-tax Officer disallowed the deduction, stating that the loss occurred in the previous year and was not directly connected to the business. The Tribunal upheld this decision, citing lack of connection between the loss and the business. However, the High Court analyzed the timeline of events and the business context. It determined that the loss should be attributed to the assessee in the assessment year 1961-62, as efforts for recovery were ongoing. The Court also established a direct link between the lost amount and a business transaction, making it a loss incurred in the conduct of business. The High Court further considered the deduction claim under section 10(1) of the Indian Income-tax Act, emphasizing that the provision implies the deduction of losses from profits or gains in assessing taxable income. Therefore, it ruled in favor of the assessee, stating that the loss of Rs. 12,000 should be an admissible deduction for the assessment year 1961-62. The Court directed the department to pay costs to the assessee and set the fee for the department's counsel accordingly. In conclusion, the High Court answered the question in the affirmative, supporting the assessee's claim for the deduction of Rs. 12,000 in the calculation of assessable income for the relevant assessment year. The judgment highlights the importance of establishing a nexus between the loss incurred and the business activities of the assessee, as well as the implicit allowance for deductions of losses under the relevant tax provisions.
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