TaxTMI 
TaxTMI 
1993 (9) TMI 99
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....ezzlement by the employee discovered long after the end of the previous year, i.e., some time in the year 1976, notwithstanding that such loss already stood reflected in the books of account for the previous year ended December 31, 1974 ?" At the instance of the Revenue : "2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the provisions of section 40(c) of the Income-tax Act, 1961, and not the provisions of section 40A(5) of the said Act, apply in the case of an employee-director ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of Rs. 41,000 representing additional payment by way of penalty levied under secti....
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....sessee-company had no knowledge as such of the loss by embezzlement in the previous year, the loss has been suffered inasmuch as goods had been surreptitiously taken out of the assessee's stock without crediting the sales account and, consequently, the loss was reflected in the books of account. The assessee-company having come to know of the embezzlement some time in the year 1976, referred the matter to a detective agency which submitted its report in February, 1977, which confirmed the fact of embezzlement in the previous year and determined the total loss by embezzlement at Rs. 9,07,230 out of which Rs. 6,54,777 related to the previous year under consideration. The Income-tax Officer was of the opinion that though the loss by embezzleme....
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.... year under consideration and the loss caused as a result thereof was reflected in the books of account of that year. It is also not in dispute that the loss was incidental to the business of the assessee and deductible in the computation of its income from business. There is also no controversy about the fact that no deduction was claimed by the assessee in the year when the embezzlement was suspected or was confirmed by the detective agency. The only question for consideration is whether the Tribunal was justified in holding that this loss was allowable as a deduction not in the year in which it took place but in the year when it was suspected. We have carefully considered the facts of the case and the order of the Tribunal. We find it d....