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Section 37(1) of the Income-tax Act, 1961 - Business Expenditure - Allowability of CUSTOM DUTY Assessee's claim of non-refund of customs duty paid under section 20 of Customs Act, 1962, as business loss under section 37(1) was allowable in year in question when assessee treated it as bad debt in its books of account even if assessee did not have any income in assessment year in question [Assessment year 1999-2000] [In favour of assessee] CIT v. Wackhardt International Ltd. [2009] 314 ITR 11 (Bom.) The assessee was an exporter. It had exported certain goods which were returned and thereafter re-exported. However, it was not in a position to furnish necessary documents as in the meantime the records of the assessee were lost on account of collapse of the building where the assessee maintained his records. It was the case of the assessee that they made attempts to reconstruct the records. However, as they were not in a position to reconstruct the records he treated the amount as bad debt for the assessment year 1996-97. The Tribunal upheld the assessee's claim of non-refund of customs duty paid under section 20 of the Customs Act, 1962, as business loss under section 37(1) in the year 1999-2000. Held that the contention as urged on behalf of the revenue was that the loss had been shown as bad debt for the financial year 1993-94 and not for the assessment year 1999-2000. Even if duty drawback was available for the previous assessment year, what was relevant was when the same was treated as bad debt by the assessee in his books of account. In view of the decision of the High Court in Lord's Dairy Farm Ltd. v. CIT [1955] 27 ITR 700(Bom.), there was no infirmity in the view taken by the Tribunal. Further, merely because there was no income in the course of assessment year 1999-2000 that would not disentitle the assessee from claiming the business expenditure in the said assessment year. Sureshkumar and J. S. Saluja for the Appellant. A.K. Jasani for the Respondent. JUDGMENT 1. The present appeal can be considered on the following questions : " (1) Whether, on the facts and in the circumstances of the case and in law, the hon'ble Income-tax Appellate Tribunal was…

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