BADRIDAS DAGA versus THE COMMISSIONER OF INCOME-TAX

Citation: [1959] 1 S.C.R. 690 · Decided: 25-04-1958 · Supreme Court of India · Bench: T.L. VENKATARAMA AIYYAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

690 
SUPREME COURT REPORTS 
[1959] 
z958 
As regards the Madhya Pradesh Act we likewise 
declare that it is constitutionally valid in so far as it 
Mnhd. Hanij 
Quareshi 
prohibits the slaughter of cows of all ages and calves 
v. 
of cows, male and female, but that it is void in so far 
The State of Biha• as it totally prohibits the slaughter of breeding bulls 
-
and working bullocks without prescribing any test or 
Da' c. J. 
requirement as to their age or usefulness. 
W c also 
hold that the Act is valid in so far as it regulates the 
slaughter of other animals under certificates granted 
by the authorities mentioned therein. 
In the premises we direct the respondent States not 
~ 
April :15. 
to enforce their respective Acts in so far as they have 
' 
just been declared voitl by us. The parties will bear 
and pay their own costs of these applications. 
Petitions partly allowed . 
• 
BADRIDAS DAGA 
v. 
THE COMMISSIONER OF INCOME-TAX 
(VENKATARAMA AIYAR, GAJENDRAGADKAR and 
A. K. SARKAR JJ.) 
Income Tax-Deduction-Misappropriation by employee-Loss 
incidental to the conduct of the business--Indian Income-tax Act, 
I922 (II of I922), s. IO(I), (z)(xi), (z)(xv). 
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 \vithdrew 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 parl 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 ~as \vhether the amount which was misappropriat-
ed 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 expenditute under 
. s. 10(2)(x") of the Indian Income-tax Act, 1922. It can, however, 
be deducted in computing the profits of the appellant under 
• 
• 
• 
S.C.R. 
SUPREME COURT REPORTS 
691 
s. 10(1) of the Act as a loss incidental to the carrying on of his 
r958 
busin~ss. 
Badridas Daga 
Where an agent or an employee of a businessman in charge 
of the business is given authority to operate on the bank accourits Th C v. . . 
d 
· h 
· 
. 
e ommissioner 
an wit draws moneys m the purported exercise of that autho-
f 1 
1 
rity, his action is referable to his character as such authorised 
0 
ncome- ax 
agent or employee and any loss resulting from misappropriation 
of the money by him would be one incidental to the carrying on 
of the business, and it is not necessary to show that the money 
was withdrawn for the conduct of the business. 
Curtis v. ]. & G. Oldfield, (1925) 9 Tax Cas. 319 and Rama-
swami Chettiar v. Commissioner of Income-tax, Madras, (1930) 
I.LR. 53 Mad. 904, explained and distinguished. 
Venkatachalapathy Iyer v. Commissioner of Income-tax, (1951) 
20 I.T.R. 363, Lord's Dairy Farm Ltd. v. Commissioner of Income-
tax, (1955) 27 l.T.R. 700 and Motipur Sugar Factory Ltd. v. Com-
missioner of Income-tax, (1955) 28 I.T.R. 128, approved. 
Cr;IL APPELLATE JURISDICTION : Civil Appeal No. 
149of1956. 
Appeal by special leave from the judgment and 
order dated December 22, 1954, of the former Nagpur 
High Court in Misc. Civil Case No. 36 of 1954. 
R. J. Ko"lah, J. M. Thakar, Ramesh A. Shroff, J. B. 
Dadachanji, S. N. Andley and Rameshwar Nath, for 
the appellant. 
H. N. Sanyal, Additional Solicitor-General of India, 
K. N. Rajagopa"la Sastri and R. H. Dhebar, for the 
respondent. 
1958. April 25. 
The Judgment of the Court W!tS 
delivered by 
VENKATARAMA ArYAR J.-This is an a.Ppeal against 
the judgment of the High Court of Nagpur in a refe.r-
ence under s. 66(1) of the Indian Income-tax Act, 
1922, hereinafter referred to as the Act. • 
l'he appellant is the sole proprietor of a firm called 
Bansilal Abirchand Kasturchand, which carries on 
b11siness as money-lenders, dealers in shares and bullion 
i1nd .ccmimission agents ~n B0m4ay, Calcutta a:r;i.d other 
:Places. .He is a resident of ]3ik11.1:u:~r, a:r;i.d m!l>?J.ages tht:? 
SS 
Venkatarama 
Aiyar ]. 
692 
SUPREME COURT REPORTS 
(1959] 
, 95s 
business at the several places through agents. During 
the relevant period, the agent of the firm at Bombay 
Badridas Daga was one Chandratan, who held a power-

Excerpt shown. Read the full judgment & AI analysis in Lexace.