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TMI Blog1965 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... bulal in the books of the assessee showed that the assessee purchased grains from him and made payments in cash. On the 10th of January, 1955, during the accounting year in question, a sum of Rs. 10,000 was sent by the assessee from Bhagalpur to Asarganj, where Babulal resided and carried on his business, for payment to him through one of the old employees of the assessee, Sri Sachidanand. On the way he was robbed of the said amount on the point of a pistol by some robbers. The assessee claimed the amount in the first instance, as it appears from the order of the Income-tax Officer, as a bad debt written off in the account of Babulal Kharga because the amount when it was sent on the 10th of January, 1955, to Babulal was debited in his account in the hope that it would reach him at Asarganj. But since the amount was robbed on the way and did not reach Babulal, it had to be written off and was, therefore apparently claimed as a bad debt due from Babulal but, in substance, the claim was that it was a trading loss which should be taken into consideration while assessing the profits of the assessee under section 10(1) of the Act. The Income-tax Officer disallowed the claim on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Secondly, counsel submitted that even if that finding remains undisturbed, there is no recording of any finding of other necessary facts which would entitle the assessee to claim the sum of Rs. 10,000 as a trading loss. In Motipur Sugar Factory Ltd. v. Commissioner of Income-tax, the facts were that the assessee-company carrying on business in the manufacture of sugar and molasses out of sugarcane deputed an employee, in compliance with the statutory rules, with cash for distribution to sugarcane cultivators at the spot of purchase. The cash was robbed on the way. The Tribunal had found that the loss was incidental to the business of the assessee, but following the decision of this court in Mulchand Hiralal v. Commissioner of Income-tax had disallowed it. It was held by Ramaswami J. (as he then was) and Sahai J., with reference to the relevant rules of the Bihar Sugar Factories Control Rules, that the assessee-company had to despatch money to various purchasing centres for payment to sugarcane cultivators. That was an essential part of the business of the assessee for the sugarcane factory could not work unless there was supply of sugarcane. In that view of the matter, their L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Nainital Bank Ltd. The assessee in this case was the Nainital Bank Limited, a public limited company which carried on the business of banking. It had various branches and one of them was situated at Ramnagar. In the usual course of its business, large amounts were kept in various safes in the premises of the bank. On June 11, 1951, at about 7 p.m. there was a dacoity in the bank and the dacoits carried away the cash amounting to Rs. 1,06,000 and some ornaments pledged with the bank. The bank claimed the said amount as a deduction in computing its income from the banking business on the ground that it was a trading loss. The claim was not accepted by the Income-tax Officer, the Appellate Assistant Commissioner or by the Income-tax Appellate Tribunal. But, on a reference, the High Court of Allahabad held that the loss by dacoity was incidental to the banking business and was, therefore, a trading loss. Subba Rao J., on a review of many authorities, upheld the decision of the High Court. In regard to the passage which has been extracted by me above from the judgment of Venkatarama Aiyar J. in Badridas Daga's case, Subba Rao J. has said : " The correctness or otherwise of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im deduction. It has to furnish proof as to how the deduction claimed is connected with its business or its profits." Relying upon the decision of the Supreme Court in Badridas Daga v. Commissioner of Income-tax, which in its turn had approved the observations of the learned Chief Justice in Ramaswami Chettiar v. Commissioner of Income-tax, Tek Chand J. held : " Whether the loss incurred was incidental to the carrying on of the trade and therefore admissible would depend upon the facts of a particular case and in this case evidence has not been adduced to show that the loss incurred by the assessee in the manner alleged was in fact incidental to the conduct of his business." We would, however, at this stage like to point out, with reference to the later decision of the Supreme Court in Nainital Bank's case, that Mr. Justice Subba Rao has referred with approval to the decision of the High Court of Australia in Charles Moore Co. (W.A.) Pty. Ltd. v. Federal Commissioner of Taxation. In that case it was pointed out that : " Banking the takings is a necessary part of the operations that are directed to the gaining or producing day by day of what will form at the end of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance in the account for purchases made or to be made from him. That is to say, on these findings one may draw the conclusion that in the opinion of the Tribunal the money was sent through the employee of the assessee for the purpose of the business and during the course of its operations : hence one may say that it was incidental to the business, The only ground for rejecting the claim of the assessee given by the Tribunal is that the assessee had chosen recklessly and carelessly to expose itself to the risk of highway robbery without proper protection and that there was no business necessity proved for such exposure. In the earlier portion of the order, the Tribunal has observed at one place : "It is seen from this ledger account that moneys bad been remitted to the adathiya by the same means on former occasions too." The findings of facts have been recorded by the Tribunal in a manner which do not enable us to satisfactorily answer the question of law formulated for our opinion. The findings have got to be recorded in the light of the principles discussed above on the following points : (1) Whether the assessee has satisfactorily proved in this case that the loss occurre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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