9911796707
TMI Blog2000 (4) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT (Appeals) has erred in fact and law in sustaining disallowance of Rs. 3,000 out of Telephone expenses and of Rs. 2,500 out of travelling and conveyance expenses. The disallowance has been made and sustained on ad hoc arbitrary basis and is liable to be deleted. (3) That consequential relief is allowable in respect of interest charged under sections 234B and 234C of the Income-tax Act. (4) That the order of the learned CIT(Appeals) and the assessment as made are against law and facts of the case involved. 2. First ground relates to the addition of Rs. 68,118. The Assessing Officer while framing assessment under section 143(3), noticed that establishment expenditure included a sum of Rs. 68,118 related to L.N. Datta. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was adjusted against the claim of gratuity, it was contended by the ld. counsel that the assessee adjusted the same in full and final against the gratuity due to him at Rs. 90,000. In the alternative, it was argued by the ld. counsel that the sum may be treated as bad debts or business loss for the reason that the assessee could not recover the sum in question which was advanced to the said employee during the course of business. In support of his claim for the said amount as bad debt or business loss, the ld. counsel placed reliance on the judgment of Gujarat High Court in the case of CIT v. Abdul Razak Co. [1982] 136 ITR 825 and CIT v. Jwala Pd. Radha Kishan [1977] 107 ITR 540 (All.). 3.1 On the other hand, the ld. D.R. supported the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount in question represented gratuity, we are of the view that the same cannot be accepted in view of the fact that there is no evidence for the payment of gratuity to the said Shri Datta and the amount in question represents unilateral write off against the so called 'gratuity'. In order to claim deduction for an expenditure, there must be a claim for the expenses and the assessee must have either paid the expenditure or admitted the liability to pay it, depending upon the method of accounting followed by it. But in the instant case neither any claim was made by Shri Datta for gratuity nor any such amount was paid or liability to pay was accepted by the assessee. Under these circumstances, we are not inclined to accept the claim of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business and therefore the loss incurred in this connection was held to be business loss. From the facts of these two cases, it is clear that these cases are distinguishable from the facts of the instant case. Whereas in these cases, the advancement of loans was intimately connected with the assessee's business and the assessee made these advances in the course of commercial relations which ultimately turned out to be not recoverable and hence the claim of the appellants were accepted by the High Courts. On the other hand in the instant case, no amount was advanced to Shri Datta for commercial purposes. He withdrew money in excess of his dues and finally did not pay it back. Hence the reliance of the ld. counsel on these judgments for treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cashiers, clerks and peons. Salary and remuneration paid to them are admissible under section 10(2)(xv) as expenses incurred for the purpose of the business. if employment of agents is incidental to the carrying on of business, it must logically follow that losses which are incidental to such employment are also incidental to the carrying on of the business. Human nature being what it is, it is impossible to rule out the possibility of an employee taking advantage of his position as such employee and misappropriating the funds of his employer, and the loss arising from such misappropriation must be held to arise out of the carrying on of business and to be incidental to it. And that is how it would be dealt with according to ordinary comme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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