COMMISSIONER OF INCOME TAX Vs. BANDARU SUBBA RAO

JUDGEMENT

(1.) ON the application by the Revenue, filed under S. 256(2) of the IT Act, 1961 the following questions were directed to be referred. Accordingly, the Tribunal made a statement of the case and referred the following questions:

(2.) THE assessee claims to have been carrying on the business of money-lending. In the asst. yr. 1975-76, shells of primary gold and some silver articles, which were valued at Rs. 26,275 were seized by the Central Excise Authorities from the assessee. On the basis of that information, the ITO treated the said amount as income from the undisclosed sources and accordingly assessed the tax under S. 69 of the Act. The appeal filed by the assessee before the AAC having failed, he approached the Tribunal. Before the Tribunal the assessee took the plea that as the business itself was illegal, the value of the gold and silver articles should be allowed as deduction as they were confiscated by the Central Excise Authority. This argument was given effect to and the Tribunal held that confiscation of gold and silver articles by the Central Excise Authorities was business loss allowed under S. 37 of the Act. Accordingly the Tribunal allowed the appeal on 18th July, 1991. From that judgment, the abovesaid questions arose.

(3.) SHRI S.R. Ashok further contends that CIT vs. Piara Singh (1980) 124 ITR 40 (SC) has been wrongly applied by the Tribunal and, therefore, the deduction could not have been allowed.