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TMI Blog1966 (7) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the money was incidental to their business. The Income-tax Officer did not accept that and did not allow the deduction. The Appellate Assistant Commissioner, however, took the view that the loss having been caused in connection with the carrying of the business, and being incidental to the business of the assessee was allowable for the purpose of determining the net profit of the assessee out of its business. Against that the department came in appeal before the Income-tax Appellate Tribunal, who set aside the order in that respect of the Appellate Assistant Commissioner, and upheld the action of the Income-tax Officer. The assessee thereafter asked for a reference and the Appellate Tribunal has sent the statement of case to this cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the cash in hand was ascertained and the shop was closed for the day, the cash had to be left in the shop room as it was necessary to keep sufficient amount of cash during the night so that transactions of the next day may be started without any inconvenience. If there was a theft in the shop at night even after business hours, the loss due to theft must necessarily be considered to have directly arisen from the carrying on of the business and incidental to it." This finding by the Appellate Assistant Commissioner, in relation to the justifiability or otherwise of the deduction claimed by the assessee, was not questioned before the Appellate Tribunal. I am rather inclined to say that the Appellate Tribunal proceeded on those facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm. In that view, there cannot be any doubt whatsoever that the loss sustained by theft in respect of that amount was incidental to the business and the assessee was entitled to deduct that from its gross receipt. The Appellate Tribunal did not dispute the principle which the Appellate Assistant Commissioner applied to the case, on the basis of the case, Badridas Daga v. Commissioner of Income-tax. A claim for a deduction for which there is no specific provision under section 10(2) of the Income-tax Act can be admissible, if it arises out of the carrying on of the business and is incidental to it, having regard to the commercial practice and trading principles. The case before the Supreme Court involved a claim for deduction on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... swami Chettiar v. Commissioner of Income-tax to the effect that it was a business loss. They laid down the guide line as below : "We may now summarise the legal position thus. Under section 10(1) of the Act the trading loss of a business is deductible for computing the profit earned by the business. But every loss is not so deductible unless it is incurred in carrying out the operation of the business and is incidental to the operation. Whether loss is incidental to the operation of a business is a question of fact to be decided on the facts of each case, having regard to the nature of the operations carried on and the nature of the risk involved in carrying them out. The degree of the risk or its frequency is not of much relevance but it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, in the other it forms part of the stock-in-trade without depending on the intention of the banking company. This distinction was in connection with the question whether the money that was robbed off the company's premises was or was not the stock-in-trade of the business is compared to the money kept by the money-lender in his house at the time when the theft took place there. It cannot be contended that the loss in the stock-in-trade alone is permissible to be deducted under section 10(1) of the Act. Any loss other than in stock-in-trade, if incidental to the business, will also come within the purview of that section. That is why their Lordships of the Supreme Court, while referring to the case of Ramaswami Chettiar v. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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