2010 (9) TMI 64

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....L) 1. The following question of law is referred for opinion of this Court:- "Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the loss of Rs. 2,08,774/- incurred due to embezzlement made by the employee at the Ahemdabad Branch was not allowable in the assessment year 1982-83 in which year it was discovered." 2.....

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....982-83, inasmuch as, the assessee had not proved that despite all means exhausted by it, it would not be in a position to recover the aforesaid amount from the employee who had embezzled the same. The Tribunal has upheld this view of the CIT (A). While doing so, the Tribunal has placed reliance on the judgment of the Supreme Court in Associated Banking Corporation of India Ltd. Vs. CIT, 56, ITR 1.....

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....er's funds takes place, whether the employee is aware or not of the embezzlement, there results a trading loss. So long as there is a reasonable prospect of recovery of the amounts embezzled, trading loss in a commercial sense cannot be deemed to have resulted. Embezzlement of the funds by an agent, like a speculative adventure, does not necessarily result in loss immediately when the embezzlem....