Business loss and bad debt deduction requires nexus with the assessee's own trade; unrelated liabilities are not allowable.

A loss or debt is deductible only if it arises in the assessee's own business and is incidental to that trade. The Court applied the settled principle that a liability attributable to another person's business cannot be claimed as a business loss, and that a sum is allowable as a bad debt only when it arises out of and as an incident of the assessee's trade. On the facts, the written-off amount did not satisfy that test, so the deduction was disallowed and the issue was answered against the assessee.

---

---

Issues: Whether the sum of Rs. 12,841 written off by the assessee was deductible as a bad debt or as a loss incidental to his business.

Analysis: The claim was examined against the settled rule that, for deduction, the loss must arise in the assessee's own business and not be a liability or payment attributable to the business of another person. A debt is allowable as a bad debt only if it arises out of and as an incident to the trade. On the facts, there was no material distinction from the governing Supreme Court decision applied by the Court.

Conclusion: The deduction was not admissible and the question was answered in the negative, in favour of the Revenue.

Final Conclusion: The assessee was not entitled to deduct the amount either as a business loss or as a bad debt.

Ratio Decidendi: A loss is deductible only if it is incurred in the assessee's own business and a debt is allowable as a bad debt only when it arises out of and as an incident to the trade.

---