2001 (1) TMI 52

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....a business loss or as an expenditure under section 37(1) of the Income-tax Act, 1961, in the computation of the assessee's income for the assessment year 1974-75 ?" The facts relating to this reference are as under : The assessee is a Hindu undivided family deriving income, inter alia, from sarrafa, money-lending and utensils business. In one shop sarrafa business was carried on, while in the other shop, utensils business was done. The preventive staff of the Customs and Central Excise Department searched both the shops on May 31, 1973. They seized the following things from the two shops : Sarrafa shop         Sarrafa shop 1. Cash          &n....

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....sed. He, however, reduced the income of the assessment years 1972-73 and 1973-74. The Department as well as the assessee both preferred appeals before the Tribunal. The Tribunal dismissed the appeals. The assessee filed an application for making reference to this court arising out of the order of the Tribunal and the Tribunal has referred the question to us narrated above. The admitted facts are that the primary gold and gold ornaments were seized from the petitioner by the Collector of Customs on the ground that the petitioner was carrying on the business without having any licence under the Gold (Control) Act. The Income-tax Officer also did not accept the explanation submitted by the assessee that the primary gold and gold ornaments b....

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.... the business was lawful but subsequently entered into illegal field by carrying on gold business, he is not entitled to claim any business loss. He has placed reliance upon the decision rendered in Haji Aziz and Abdul Shakoor Bros. v. CIT [1961] 41 ITR 350 (SC), wherein, the assessee, who carried on the business of importing dates from abroad and selling them in India, imported dates from Iraq partly by steamer, his goods were confiscated by the customs authorities and he was also made liable to pay fine. The assessee claimed that he was entitled to deduct the amount of fine paid by him as an allowable expenditure under section 10(2)(xv) of the Indian Income-tax Act, 1922. The Supreme Court held that an expenditure is not deductible unless....