TMI BlogMisappropriation of funds by an employee led to the assessee claiming expenses u/s 37(1) of the Act,...Misappropriation of funds by an employee led to the assessee claiming expenses u/s 37(1) of the Act, which were later discovered to be embezzlement. The assessee suffered a loss due to the employee's fraudulent actions. The CBDT Circular No. 35-D states that losses arising from embezzlement are allowable u/s 28(i) of the Act. The revenue contended that the claim should be u/s 28 instead of Section 37(1). The assessee offered the recovered amount of Rs. 229 lakhs to tax but had not recovered the impugned amount during the assessment year. The addition was unjustified as the debited amount, though not fulfilling Section 37(1) expenses, was related to an allowable embezzlement loss. Relying on Bombay Forgings Pvt Ltd and G.G. Dandekar Machine ..... ..... X X X X Extracts X X X X X X X X Extracts X X X X
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