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TMI Blog2019 (10) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... money and writing off the balance. Thus we found that the aforesaid loss has incurred in the course of business of the company and therefore should be allowed as a business loss. Addition being arbitration award granted in favour of Advani group by the Arbitral Tribunal constituted by NSE - HELD THAT:- One of the procedure is by filing an arbitration claim by the parties to the dispute. Pursuant thereto Advani group filed arbitration proceedings against the assessee company for recovery of the shares belonging to the Advani group and held by the assessee company. The Arbitral Tribunal vide its order dated 13th December 2011 allowed the claim of the Advani group. In para 6 of the said Award the Tribunal has given a finding that the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of ₹ 55,18,606/- was on account of misappropriation of funds by one of the directors, Mr. P.K. Advani. 2. The ld. CIT(A) erred in law and on facts in confirming the disallowance of ₹ 55,18,606/- claimed as Bad Debts/Business Loss considering the same as personal expenses. 3. The ld. CIT(A) erred in law and on facts in confirming disallowance of ₹ 20,99,056/- being arbitration award granted in favour of Mr. P.K. Advani, considering the same as not incurred in the ordinary course of business of your appellant. Your appellant craves leave to add, amend, modify, substitute, alter or withdrawn any of the grounds of appeal. 2. Rival contentions have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Advani was removed as a director of the company. After the exit of Mr. Advani, the assessee company on perusal of its books of accounts realised that a sum of ₹ 95,44,693/- [details at pg 6 of CIT(A) order] was misappropriated by Mr. Advani by debiting the assessee company's accounts on account of his various personal expenses or non-business expenses. The assessee company recovered a sum of ₹ 40,26,087/- and the balance amount of ₹ 55,18,606/- was written off and claimed as business loss which is agitated in this appeal. 5. From the record we also found that the assessee in arbitration proceedings initiated by Advani group before NSE made a claim of the said amount as evident from pgs 3, 4 and 5, pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Corporation of India Limited vs CIT reported in 56 ITR 1(SC) has held that the loss by embezzlement must be deemed to have occurred when the assessee came to know about the embezzlement and realized that the amount embezzled could not be recovered . In another decision, the Hon'ble Supreme Court in the case of Badridas Daga V/s CIT reported in 34 ITR 10) (SC) has held that the losses which have been suffered by the assessee as a result of misappropriation by an employee have (1) which was incidental to the carrying on the business and should therefore be deducted in computing the profit of the business. 8. In view of the above discussion, we direct the A.O. to allow sum of ₹ 55,18,606/- as business loss. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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