2005 (10) TMI 37 - HC - Income Tax

Whether Tribunal was right in holding that the assessee was entitled to a deduction of a sum of Rs. 3, 45, 000 as business loss etc.? - it is apparent that the impugned order of the Tribunal does not suffer from any infirmity. In fact the entire issue is based on facts and appreciation of evidence without involving any question of law. The Tribunal was thus right in holding that the assessee was entitled to deduction of a sum of Rs. 3, 45, 000 as business loss. The question therefore is accordingly answered in the affirmative i.e. in favour of the assessee and against the Revenue

Summary

Issues:
Whether the Tribunal was right in holding that the assessee was entitled to a deduction of a sum of Rs. 3,45,000 as business loss.

Analysis:
The case involved a dispute regarding the deduction of a business loss claimed by the assessee amounting to Rs. 3,45,000 for the assessment year 1986-87. The loss arose from a contract for importing dates from a Dubai-based party, where the Dubai party presented false documents and collected money without delivering the dates. The assessee attempted to recover the money but was unsuccessful. The Assessing Officer disallowed the claim, citing negligence on the part of the bank official. However, the Deputy Commissioner of Income-tax (Appeals) allowed the claim, stating that the loss was incurred in the course of business. The Tribunal upheld the decision of the Deputy Commissioner, emphasizing the evidence of loss incurred by the assessee, the failure of the Dubai party to honor post-dated cheques, and the lack of evidence provided by the Revenue to refute the genuineness of the transaction.

The Revenue contended that the Tribunal erred in confirming the allowance of the deduction, arguing that if the assessee succeeded in a civil suit against the bank, they would not be required to make any payment, resulting in a double benefit. On the other hand, the respondent's counsel defended the Tribunal's decision, highlighting the failure of the assessee in the civil suit against the bank, which negated the possibility of double benefit. The Tribunal's findings supported the assessee's claim, stating that the loss was genuine, incurred in the relevant year, and the Revenue failed to prove otherwise. The Tribunal also noted that the negligence of the bank official did not absolve the assessee of the loss suffered.

In conclusion, the High Court upheld the Tribunal's decision, affirming that the assessee was entitled to the deduction of Rs. 3,45,000 as a business loss. The judgment emphasized that the Tribunal's decision was based on factual findings and evidence, without any legal question involved. The reference was disposed of in favor of the assessee, with no order as to costs.