1983 (10) TMI 85

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.... and challans were filed by the police against those two persons in the Magisterial Court at Indore. D.S. Mehta was convicted under section 408 of the Indian Penal Code, 1860, for criminal breach of trust on 31-3-1980 and was sentenced to rigorous imprisonment for 3 years and fine while A.K. Verma was acquitted. 3. The assessee debited Rs. 51,398 to profit and loss account in the accounting year relating to the assessment year 1969-70 on account of 'amount and value of stocks misappropriated'. 4. The assessee claimed deduction in the assessment for the assessment year 1969-70 but it was rejected by the ITO on the ground that it was premature. In the appeal against the said rejection for the assessment year 1969-70, the AAC while confirmin....

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....C) and other cases. (iii) The loss arising out of embezzlement arose in the accounting year relevant to the assessment year 1969-70 and right from the beginning the assessee did not have any hope of recovering anything out of the amount of Rs. 51,398 and that is the reason why the amount had been written off in the accounting year relevant to the assessment year 1969-70 and no civil suit had been filed. (iv) The assessee was under the wrong impression that claim was allowable under section 36(2)(iii) of the Act. (v) The assessee had not produced any evidence to show that something happened in the previous year relevant to the assessment year 1972-73 to show that amount was no longer recoverable. The amount had become irrecoverable prior ....

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....accounting year relevant to the assessment year 1972-73, the limitation for institution of suit had expired. Hence, no further, legal remedy was available. The concerned employees were contesting the criminal proceeding and they were not willing to pay any amount voluntarily. They had no assets from which recovery could be made and it was futile to institute civil suit for recovery and incur unnecessary expenses. In the circumstances, it must be held that no chance of restitution had survived in the accounting year relevant to the assessment year 1972-73 and the amount had become irrecoverable in that year and as such amount representing said loss was liable to be deducted. 11. The question is as to what the loss was. The accounts of the c....