2004 (11) TMI 54

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....h" in District Mandsour. On July 18, 1985, CBI sleuths arrested the respondent while transporting a huge quantity of contraband article-narcotic drugs-heroin in jeep (Jonga) RSO 3592. This led to further raid in his residential premises. In this raid, one clandestine laboratory to manufacture heroin powder along with several contraband drugs were recovered. All these contraband articles were seized and proceedings under the Narcotic Drugs and Psycho-tropic Substances Act, 1985, were initiated against the assessee. We are not concerned with these proceedings. So far as the proceedings under the income-tax are concerned with which we are concerned, the assessee (respondent) filed his return for the assessment year 1986-87. It is in this....

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.... of the provisions of the Narcotic Drugs and Psychotropic Substances Act, 1985, can be treated to be stock-in-trade possessed by a medical practitioner? 2. Whether such medical practitioner can be permitted to deduct Rs. 2 lakhs from such stock of heroin as loss during the trade? 3. Whether the order passed by the Income-tax Appellate Tribunal, Indore Bench, in I.T. No. 272 of 1989-90 for the assessment year 1986-87 is perverse and illegal?" Heard Shri R. L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the Revenue, and Shri D. K. Chhabra, learned counsel for the assessee. Having heard learned counsel for the parties and having perused the record of the case, we are inclined to allow the appeal and set as....

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.... Act. In this view, the rigour of the Explanation to section 37 was fully satisfied and hence the question of claiming any deduction for the value of the seized article did not arise nor was the assessee entitled to claim any such deduction who was found indulging in such heinous and illegal business unconnected with his pious professional activity. Indeed, it was a disgrace for the doctor community where one doctor was found indulging in such kind of activities against humanity. In our opinion, the learned members of the Tribunal committed an error of law when they placed reliance on a decision of Piara Singh [1980] 124 ITR 40 (SC) as also the speech of the Finance Minister gave on the floor of the House of Parliament at the time of int....