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PETITIONER: BADRIDAS DAGA
Vs.
RESPONDENT: THE COMMISSIONER OF INCOME-TAX
DATE OF JUDGMENT: 25/04/1958
BENCH: AIYYAR, T.L. VENKATARAMA BENCH: AIYYAR, T.L. VENKATARAMA GAJENDRAGADKAR, P.B. SARKAR, A.K.
CITATION: 1958 AIR 783 1959 SCR 690
ACT: Income Tax-Deduction-Misappropriation by employee-Loss incidental to the conduct of the business-Indian Income-tax Act, 1922 (II Of 1922), S. 10(1), (2)(Xi), (2)(XV).
HEADNOTE: The appellant engaged an agent for the purposes of carrying on his business and conferred on him large powers of manage- ment including authority to operate on bank accounts. While acting under such authority the agent withdrew moneys from the bank and used them for the discharge of his personal debts. The appellant was able to recover from the agent only a part of the amount misappropriated by him, and the balance had to be written off at the end of the accounting year as irrecoverable. The question was whether the amount which was misappropriated and found irrecoverable was allowable as a deduction under the Indian Income-tax Act in determining the profits of the appellant. Held, that the amount in question is not allowable either as a bad debt under s. 10(2)(Xi) or as a business expenditure under S. 10(2)(XV) Of the Indian Income-tax Act, 1922. It can, however, be deducted in computing the profits of the appellant u...