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TMI Blog1986 (11) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ck for the purpose of depreciation. 3. The IAC (Assessment) worked out the disallowance of Rs. 37,945 under s. 40(C)/40A(5) on the following basis: Name Gross Salary Net covered under s. 40C/40-A(5) Net disallowance . Rs. Rs. Rs. Chairman 84,268 1,100 11,168 Managing Director 95,697 2,910 20,787 Shri Sher Jung Bahri, Director 79,952 6,100 1,852 Shri C.L. Bahri 74,082 1,100 982 Shri Fraquir Singh 76,236 1,100 3,136 . . . 37,945 4. Before the Commissioner (A), it was submitted in appeal that the remuneration in question was not excessive or unreasonable and should have been allowed fully. In any case, disallowance on account of Director's fees, contributions to Provident Fund and Superannuation Fund and reimb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i C.S. Aggarwal, ld. Counsel for the assessee, objecting to the disallowance maintained by the Commissioner (A) contends that the Commissioner(A) had wrongly held that the Provident Fund contributions could be included in the computation as the fund in the instant case was not approved. But this was not correct. Attention is invited to pages 3 to 8 of the assessee's paper book. These contain a copy of the Tribunal's order in this very case for the asst. yrs. 1978-79 and 1979-80 (ITA Nos. 195 & 196/81 dt. 30th Jan., 1982). For these two years also, disallowances were made in terms of s. 40(c) of the Act. Probably the reference is to cl. (iii) off the second proviso to s. 40-A(5)(a) out of the salary and other benefits, paid to the Chairman a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perquisites. However, we do not find any discussion with regard to such individual items in the order of the Commissioner (A). In other words, the Commissioner (A) has not passed a speaking order in this regard. Shri Aggarwal, in fact, filed a working before us showing that, while there was no excess payment over Rs. 72,000 in the cases of Sher Jung, C.L. Bahri and Faquir Singh, there was such excess payment in the cases of M.L. Bahri and S.L. Bahri being Rs. 15,315 and Rs. 6,415 respectively. In other words, according to the ld. Counsel, disallowance could have been made only to the extent of Rs. 21,730. However, this computation was admittedly not before the Commissioner (A). Nor (as already noted) has the Commissioner (A) chosen to pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial company. In the light of the decisions in CIT vs. Moti Ram Nand Ram (1940) 8 ITR 132 (PC) and Narang Industries Ltd. vs. CIT (1967) 66 ITR 316 (Del), the loss in question was a capital loss and rightly disallowed as such. 8. Shri Aggarwal submitted that the cash in question was being carried by an employee of the assessee company in the course of carrying on business and hence it had to be allowed as a revenue loss. He invited attention in this regard to Ramchandra Shivanarain vs. CIT 1978 CTR (SC) 5 : (1978) 111 ITR 263 (SC). The Departmental Representative, Shri D.K. Sharma, on the other hand, supported the orders of the authorities below. 9. We have considered the position. We think the facts of this case are squarely covered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng loss; that it is immaterial whether the money is a part of the stock in trade, such as of a banking company or a money-lender or his directly connected with business operations; and that the risk is inherent in the carrying on of the business and is either directly connected with it or incidental to it. 10. In the instant case, the risk of carrying cash by Ramesh Khanna, in view, is seen to be directly connected with the carrying on of the business of the assessee. In any case, there can be no dispute that it was incidental to the carrying on of the assessee's business. On this finding of fact, we have to hold that the assessee's claim for deduction of Rs. 40,000 (the factual part of the claim not having been disputed) is allowable as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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