Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business loss/deductions - Year in which deductible - Assessment year 1978-79 - Assessee-firm came to know about some embezzlement done by its employees in one of its business premises in 1977 - However, exact loss on that account came to be known by it on 07-07-1979 when its chartered accountant submitted its report - Whether assessee had discovered that loss only on 07-07-1979 and not prior to it - Held, yes - Whether, therefore, Tribunal was justified in holding that amount of embezzlement loss could not have been claimed as business loss during assessment year 1978-79 since trading loss would not fall in that year - Held, yes Section 80VV of the Income-tax Act, 1961 - Deductions - Expenses incurred in connection with income-tax proceedings - Assessment year 1978-79 - Assessee incurred Rs. 20,876 for making payment to its income-tax advisers for representing its case before income-tax authorities and claimed deduction accordingly - Out of said sum, Assessing Officer allowed a sum of Rs. 5,000 and balance was disallowed by invoking section 80VV - Whether section 80VV does not refer to expenditure of a particular year and, therefore, all expenses, which were incurred in a previous year in respect of any proceedings before revenue or Tribunal or Court relating to determination of any liability under Act whether by way of tax, penalty or interest are covered by said section and ceiling of Rs. 5,000 would be applicable - Held, yes - Whether Tribunal was right in holding that sum in question could not be allowed as deduction - Held, yes FACTS The assessee-firm was engaged in the business of running of oil mill, ice and cold storage plants, etc. For its business, it main tained depots at various places including Calcutta, Cuttack and Haldwani. Sometime in October 1977, it noticed that the supplies of raw materials from the said depot had become irregular. While trying to find out the reasons there for, it came to discover considerable embezzlement at the said depot done by its employees. An employee was deputed for the detailed examination of same. The said employee after completion of preliminary investigation, arrived…

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