TaxTMI 
TaxTMI 
1971 (3) TMI 1
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....on 10 of the Income-tax Act ? " The assessee is a limited company engaged in the business of generation and supply of electricity. It had some surplus funds. Out of the surplus funds, a sum of Rs. 45,000 was invested in fixed deposit with a non-scheduled banking concern of the name and style of M/s. Mansa Ram & Sons. Besides, it had another account with that bank called as "war costs surcharge account", in which there was a credit balance of Rs. 897. The company came to know that the bank was not doing well and insolvency petition had been filed against it by some of its creditors. The assessee grew apprehensive and filed a civil suit for the recovery of its dues. The company, however, failed to realise anything even though a decree was ....
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...., profession or vocation ' in respect of the profits or gains of any business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely : (xv) any expenditure (not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation." The Tribunal has not disputed that any expenditure incurred for safeguarding or protecting an asset of a business is an allowable expenditure and indeed such a proposition cannot be disputed. It is now settled beyond doub....
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....al, that some surplus funds have been taken out by him out of the business assets and put in an investment of different kind, but the case of a company stands on a different footing. In a company, which is formed for business, all its assets represent business assets. It is rather difficult to visualize that a limited company could segregate any of its assets and treat it as private property. Nothing has been placed on the record to show that the company took any step to take this amount of Rs. 45,000 out of its assets and to treat it as a non-business asset. It is possible to argue that the fixed deposit represented a capital asset and the loss of such capital asset is, ordinarily, not an admissible expenditure under section 10(2)(xv). ....
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.... and exclusively for the purpose of the business. Under the Income-tax Act, 1922, a claim for bad debt falls for consideration under section 10(2)(xi) while expenditure incurred for purposes of business falls under section 10(2)(xv). In the case of Curtis v. J. & G. Oldfield, a company claimed as trading loss a certain sum of money, which had been misappropriated by its managing director and had been written off as a bad debt. The claim was disallowed on the ground that the loss suffered by the company as a result of misappropriation by its managing director could not be said to have arisen in carrying on the business. The second case of Badridas Daga v. Commissioner of Income-tax is also a case where a sum of money had been embezzled by th....