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TMI Blog2015 (10) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in favour of revenue for statistical purposes. Addition on account of the business loss pertaining to the amount recovered by the police from the alleged culprits - CIT(A) deleted the addition - Held that:- It is established that the loss occurred in fraud was directly connected with business operation and incidental to carrying on of business. Hence, entire amount of business loss has to be allowed as a deduction. Therefore, we find Ld. CIT(A) has rightly deleted the addition which does not need any interference on our part, hence, we uphold the same. - Decided against revenue. - I.T.A. No. 5487/DEL/2011 - - - Dated:- 10-11-2014 - Shri H. S. Sidhu And Shri T. S. Kapoor,JJ. For the Petitioner : Sh. Vikram Sahay, Sr. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of staff welfare, festival and general expenses. 3. Against the Assessing Officer s order dated 1.12.2010 passed u/s. 143(3) of the I.T. Act, 1961 assessee appealed before the Ld. CIT(A), who vide impugned order dated 16.9.2011 partly allowed the appeal of the assessee. 4. Against the above order of the Ld. CIT(A) dated 16.9.2011, Revenue is in appeal before us. 5. At the time of hearing Ld. Departmental Representative relied upon the order of the Assessing Officer. He also reiterated the contentions raised in the grounds of appeal that Ld. CIT(A) erred in deleting the addition of ₹ 60,62,443/- made by the AO in regard to disallowance u/s. 54F of the I.T., by admitting the additional evidences and stated that the CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 48,82,0001- was transferred fraudulently from the appellant's bank account running with HSBC Bank. In connection with this fraud, police arrested one Mr. Ramesh of Village Barola, District Noida and from his possession an amount of ₹ 70,000/- in cash and ₹ 9,45,252/- were traced in his bank account running with State Bank of India, Ghazipur, Delhi. In the assessment order, it is mentioned by the assessing officer that police seized ₹ 70,000/- in cash and Rs.l9,45,252/- have been traced in his bank account. The AR of the appellant has submitted that due to typing mistake, a sum of ₹ 9,45,252/- as reported by the police was stated as ₹ 19,45,252/- which is in facts ₹ 9,45,252/-. In support of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be allowed as business loss. The amount recovered by the police of ₹ 70,000/- in cash and ₹ 9,45,252/- traced in the bank account of the accused has not been received by the appellant till date. As and when it will be received by the appellant, the same will be offered as income in the year of receipt, therefore, the assessing officer's action of restricting the claimed of business loss to ₹ 28,66,748/- was not correct. The appellant is entitled to set off full loss occurred in the fraud. In support of the above view, reliance IS paced on the following judicial pronouncements:- CIT v. Smt. Pukhraj Wati Rubber [2007J 199 Taxation 107 (Punj. Har.) The assessee's representative for recovery of sale proceeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the point, it was held that loss on account of theft had to be treated as trading loss as it was directly connected with the business operation and was incidental to carrying on of business. Following the law laid down by the Supreme Court, the High Court held that the Tribunal was justified in allowing deduction on account of loss by embezzlement, which was held to be incidental to the carrying on of the business and there was a direct and proximate connection and nexus between the loss and the business operation of the assessee. In view of the above judicial pronouncement, it is established that the loss occurred in fraud was directly connected with the business operation and incidential to carrying on of business. Hence entire a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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