Business loss on discounting chits allowed where funds were used for business purposes and loss arose in trade.

Loss incurred on discounting chits was held allowable as a business loss because the amounts obtained through the chits were used for business purposes and the loss was sustained in the course of business. As the factual findings supporting business use were not displaced, the claim was admissible and the disallowance was rejected. Where two views were possible, the view favourable to the assessee was applied.

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Issues: Whether the loss incurred on discounting chits was allowable as a business loss.

Analysis: The factual findings that the amounts obtained through chits were utilised for business purposes and that the loss was sustained in the course of business were not displaced. On those findings, the claim was admissible as a business loss. Where two views were possible, the view favourable to the assessee was adopted.

Conclusion: The loss on discounting chits was allowable as a business loss and the disallowance was not sustainable.

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