TaxTMI 
TaxTMI 
2019 (9) TMI 42
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....grievance of the assessee is two- fold: • firstly, the assessee is aggrieved by the disallowance of the deduction of Rs. 5,06,54,54,878/- being the loss/ expenditure/outgo from coffers of bank incurred by the assessee as a consequence of the full and final settlement arrived at with National Housing Bank [NHB] and, • secondly, the assessee is aggrieved by the addition of Rs. 11,95,79,687/- being claim of expenses incurred outside India. 3. Representatives of both the sides were heard and case record carefully perused. 4. Facts on record show that during the period 23.03.1992 and 20.04.1992, the appellant [Earlier M/s ANZ Grindlays Bank] received nine cheques from NHB drawn on Reserve Bank of India [RBI]. All ....
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....reement by which both the parties agreed to refer the matter to the Board of Arbitrators. On 21.03.1995, the appellant filed a separate suit in the Special Court established under the Special Court [Trial of Offences Relating to Transactions in Securities] Act, 1992 at Mumbai against Shri Harshad Mehta for recovery of the sums. 8. In respect of the dispute between the appellant and NHB, the Arbitrators delivered an award rejecting NHB's claim and directed NHB to refund to the appellant bank the sum of Rs. 506.54 crores alongwith interest. 9. However, NHB filed a petition before the Special Court challenging the Arbitration Award and the Special Court, set aside the Arbitration Award and directed the appellant bank to repay to NHB the ....
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....encashed all the cheques and proceeds were credited in the account of Shri Harshad Mehta. Pursuant to the directions of the assessee RBI, the assessee repaid the amount of Rs. 506.54 crores to NHB. Therefore, there is no question of its being allowed as deduction, as loss, as claimed by the assessee. ii) The Assessing Officer also dismissed the claim of loss of stock in trade stating that the amount received by NHB was not stock in trade of the assessee as there were no business transactions between the assessee and NHB. iii) The Assessing Officer also denied the claim when there was no finding of any illegality attached to any action of the bank at any point of time before any proceedings before any forum. The Assessing O....
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....on'ble Supreme Court, liability crystallised during the year under consideration and being a legitimate business loss, the assessee is entitled for the same. The ld. AR, in support, placed reliance on the decision of the Hon'ble Madras High Court in the case of M.P. Venkatachalapathy Iyer 20 ITR 363, the Hon'ble Supreme Court decision in the case of Associated Banking, Corporation of India Ltd 56 ITR 1 and the Hon'ble Rangoon High Court in the case of A.K.A.R Family 9 ITR 347. 18. Per contra, the ld. DR strongly supported the findings of the Assessing Officer,. 19. We have given a thoughtful consideration to the orders of the authorities below. At the very outset, we have to state that the entire claim of loss has to b....
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....considered as deductible business loss. 23. Reliance placed on the decision of the Hon'ble Madras High Court in the case of M.P. Venkatachalapathy Iyer [supra] is clearly distinguishable on facts as in that case there was embezzlement by the employee clerk entrusted with several duties and the sums embezzled were allowed as business expenditure/business loss. However, the facts of the case in hand as discussed hereinabove clearly show that there is no parity in the two cases. Similar is the fact with the decision of the Hon'ble Supreme Court in the case of Associated Banking Corporation of India [supra] wherein also the Hon'ble Supreme Court considered the loss claimed on account of embezzlement. We do not find it necessary t....