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TMI Blog2017 (7) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... t any expenditure not in the nature of capital expenditure or personal expense laid out or expenditure wholly and exclusively incurred for the purposes of business or profession shall be allowed in computing the income chargeable under the head profits and gains or business or profession. Moreover, circular no. 35 issued by Board clearly states the losses arising due to negligence of employees has to be allowed as expense if the loss took place in the normal course of the business and the amount involved was necessarily kept for the purpose of business. In the present case, the losses were necessarily incurred in the normal course of business of assessee and therefore, the expenditure was allowable. - Decided in favour of assessee. - ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per client s instructions. The Assessing Officer held that no supporting evidence except copy of account showing payment of some amount by cheques was filed and he held that the statement of account filed does not prove that payment was made on account of loss to these persons and therefore, he made the addition. Aggrieved the assessee filed appeal before Ld. CIT(A) who also dismissed the appeal of assessee holding that assessee had failed to establish as to how so called business loss of 1,54,600/- was incurred by it. 4. Aggrieved the assessee is in appeal before us. 5. At the outset, the Ld. AR submitted that assessee was dealing in Marketing of Financial Instruments including securities, shares, mutual funds etc. and it was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be allowed if the loss took place in the normal course of business. 7. The Ld. DR, on the other hand, submitted that assessee has not been able to prove as to how the loss was payable by it as the losses were suffered by the clients and, therefore, these losses were suffered by its client and assessee was not entitled to claim in its profit and loss and therefore, the authorities below has rightly made and upheld the disallowance. 8. We have heard the rival parties and have gone through the material placed on record. We find that assessee is engaged in Marketing and Distribution of Financial Products and is also engaged in the share trading business and was working as sub broker of Reliance securities limited. The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is loss of these persons is not correct as every evidence is available to demonstrate that assessee had made payments for losses suffered by its clients on account of negligence of its employees. The amount paid to these persons is necessarily an expenditure which is allowable u/s 37 of the Act as section 37 of the Act clearly states that any expenditure not in the nature of capital expenditure or personal expense laid out or expenditure wholly and exclusively incurred for the purposes of business or profession shall be allowed in computing the income chargeable under the head profits and gains or business or profession. Moreover, circular no. 35 issued by Board clearly states the losses arising due to negligence of employees has to be allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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