COMMISSIONER OF INCOME TAX Vs. MAHENDRA N. SHAH

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench 'C', has referred the following question under Section 256(1) of the IT Act, 1961 (the Act), at the instance of the CIT: Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to a deduction of a sum of Rs. 3,45,000 as business loss, etc. ?

(2.) THE assessment year is 1986 -87 and the relevant accounting period is S.Y. 2041. The assessee entered into a contract for importing dates from one M/s Popular Trading Establishment of Dubai. For this purpose, a letter of credit with Union Bank of India, Porbandar, had been opened. The Dubai party presented false documents and collected money without loading and dispatching the corresponding quantity of dates. The assessee, therefore, initiated efforts to recover money from the Dubai party. Through a common acquaintance, one Shri B.V. Shah, the Dubai party could be traced and Shri B.V. Shah forwarded two post -dated cheques which were not honoured. Therefore, the assessee claimed a sum of Rs. 3,45,000 as a business loss.

(3.) THE assessee carried the matter in appeal and the Dy. CIT(A) allowed the appeal holding that the loss had been incurred in the course of business. The Revenue carried the matter in appeal before the Tribunal, but the Tribunal dismissed the appeal of Revenue upholding the decision of Dy. CIT(A).