Deductibility of unrecovered sub-contractor advances failed where year-wise loss was not proved and income estimate was upheld.

Unrecovered advances to a sub-contractor were not deductible as a business loss because the amount was not shown to have been identifiably incurred in the relevant previous year. The materials showed that advances and recoveries extended beyond the accounting year, and the assessee had not maintained regular books from which a distinct year-wise loss could be ascertained. The claim was therefore rejected both as a business loss and as a deduction, and the estimated income of Rs. 24,604 was upheld.

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Issues: Whether the assessee was entitled to treat the unrecovered amount advanced to the sub-contractor as a deductible loss for the relevant previous year, and whether the income from the contracts was properly estimated at Rs. 24,604.

Analysis: The claim for loss failed because the amount said to be irrecoverable was not shown to have been identifiably incurred in the relevant previous year. The materials indicated that the advances and recoveries extended beyond the accounting year, and the assessee had not maintained regular books of account from which a distinct year-wise loss could be ascertained. In those circumstances, the authorities were justified in treating the amount as part of an account running across more than one year and in rejecting the claim either as a business loss under section 10(1) or as a deduction under section 10(2)(xv).

Conclusion: The assessee was not entitled to the claimed deduction, and the estimate of income at Rs. 24,604 was upheld.

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