Law:

Section:

Section 28(i) of the Income-tax Act, 1961 (Corresponding to section 10(1) of the Indian Income-tax Act, 1922) - Business loss/deduction - Allowable as - Assessment year 1951-52 - Assessee carried on business in manufacture of sugar - By virtue of statutory rules framed under Bihar Sugar Factories Control Act, 1937, assessee was bound to set up purchasing centers, to locate weigh bridges for purchase of sugarcane, to purchase sugarcane at those weighment centers and to make payment to sugarcane cultivators at those centers within specified time - In compliance with those rules assessee deputed one of its employees to despatch money to sugarcane cultivators - However, said employee was robbed on his way and in spite of police investigation theft amount was not recovered - Whether to dispatch money to various purchasing centers for payment to sugarcane cultivators, was an essential part of business of assessee as sugarcane factory could not work unless there was a supply of sugarcane - Held, yes - Whether loss of money was a loss which sprang from statutory necessity of sending money to various purchasing centres and such a loss was, therefore, incidental to business carried on by assessee - Held, yes - Whether, therefore, assessee was entitled to deduct lost amount in computing its taxable income - Held, yes FACTS The assessee company was carrying on business in manufacture of sugar and molassess not of sugarcane. The Bihar Sugar Factories Control Rules, 1938, the assessee company was required to set up purchasing centers for sugarcane and to locate weigh bridges at the purchasing centers. The assessee company was also required to purchase sugarcane at these centers and to make payment for the cane to the sugarcane cultivators. In compliance with statutory rules, the assessee company deputed one of its employees to its weighment centre for making payments to the sugarcane cultivators. The cash which was carried by the employee in a jeep was robbed on the way, and in spite of police investigation the amount was not recovered and the miscreants could not be traced. The amount was thus debited by the assessee to the cane expenses account as revenue expenditure. The…

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