2006 (11) TMI 179

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.... this court by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar, arising out of its order dated June 25, 1986, in ITA No. 440(ASR)/1985, for the assessment year 1982-83: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the order of the Appellate Assistant Commissioner for directing the Income-tax Officer to allow deduction of Rs. 2,64,....

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....hority allowed the claim of the assessee for the following reasons: (i) Letter dated August 1, 1983, by the inspector (police) made it clear that there was no hope of any recovery; (ii) Payments received by Hemani were encashed through two fictitious firms; (iii) The embezzled amount was liable to be treated as trading loss for the assessment year 1985-86. On appeal by the Revenue, the....

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.... be allowed as a deduction. In Badridas Daga v. CIT [1958] 34 ITR 10 (SC), an agent of the assessee withdrew amount from bank and misappropriated the same. It was held that having regard to accepted commercial practice and trading principles, it could be held that loss arose out of carrying on of business and was incidental to it. The same principle was followed in CIT v. Nainital Bank Limited ....