set off of loss

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Sunil (Querist)
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08 March 2008 my client senr rs 5 laksh with his employee during f y 06.07 for purchase og goods .and the employee went abconding. this was shown in the books as receivavable from him.
now the police have arrested him and said that the amount is irrecoverable. the business was closed during the f y 07-08
how can he set off this loss
how to adjust this entry

Sunil

Sunil (Querist)
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08 March 2008 pleasy reply at the earliest

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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08 March 2008 This will be a business loss no doubt.

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CA. GOPAL SONIKA

CA. GOPAL SONIKA (Expert)
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08 March 2008 The loss cannot be set off. however. this can be claimed as loss in P/L account as per circular 25 of I tax act

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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09 March 2008 Embezzlement loss is not deductible under section 37(1) - A claim for deduction of loss due to embezzlement cannot be admitted under section 37(1) because money which is withdrawn by an employee out of the business without authority and by fraud on the proprietor can in no sense be said to be ‘an expenditure laid out or expended wholly and exclusively’ for the purpose of the business - Badridas Daga v. CIT [1958] 34 ITR 10 (SC)/Associated Banking Corpn. of India Ltd. v. CIT [1965] 56 ITR 1 (SC)/Lord’s Dairy Farm Ltd. v. CIT [1955] 27 ITR 700 (Bom.

HOWEVER WITH DUE RESPECT TO THE JUDICIARY , I AM OF THE VIEW THAT IT IS AN ALLOWABLE BUSINESS LOSS

Sunil

Sunil (Querist)
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10 March 2008 PLEASE GIVE CONCRETE REPLYT WITH JUDICIAL INTERPRETATION

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)
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10 March 2008 LOSS IS BUSINESS LOSS AND SHOULD BE DEBITED TO PROFIT AND LOSS ACCOUNT .IT WILL BE ALLOWED