Commissioner of Income-tax Vs. Wackhardt International Ltd. - Court Judgment

Excerpt:
- code of criminal procedure, 1973 [c.a. no. 2/1974]. section 41: [ swatanter kumar, cj, smt ranjana desai & d.b. bhosale, jj] arrest of accused - held, a police officer or a person empowered to arrest may arrest a person without intervention of the court subject to the limitations specified under the provisions of the code. the provisions of section 41 of the code provides for arrest by a police officer without an order from a magistrate and without a warrant. a distinct and different power under section 44 of the code empowers the magistrate to arrest or order any person to arrest the offender. under section 44 of the code, that power is vested in the court of the magistrate when an offence is committed in his presence. if the legislature has taken care of providing such specific power under section 44 of the code, then there could be no reason for such a power not to be specified under the provisions of chapter xii of the code. in terms of section 41, a police officer may arrest a person without a warrant or order from the magistrate for any or all of the conditions specified in that provision. language of this provision clearly suggested that the police officer can arrest a person without an order from the magistrate. thus, there appears to be no reason why on the strength of section 156(3) of the code, any restriction should be read into the power specifically granted by the legislature to the police officer. of course, freedom of investigation is the essence of these provisions but in order to suppress the mischief it is sufficiently indicated under different provisions of the code that the arresting officer should exercise his power or discretion judiciously and should be free of motive. some kind of inbuilt safeguard is available to the accused in the cases where the magistrate directs investigation under section 156 (3) of the code by taking recourse to the provisions of section 438 of the code by approaching the court of session or the high court for such relief. thus, during the course of investigation of a criminal case, an accused is not remediless and that would further buttress the above view. [jagannath singh v dr. ajay upadyay & anr 2006 cri lj 4274; 2006 (5) air bom r held per incuriam]. - however, as they were not in a position to reconstruct the records, they treated the said amount as bad debt for the assessment year 1996-97. the assessing officer disallowed the same against which an appeal was filed to the commissioner of income-tax (appeals). the learned commissioner (appeals) considering the facts on record allowed the claim of the assessee. 3. the contention as urged on behalf of the revenue is that the loss have been shown as bad debt for the financial year 1993-94 and not for the assessment year 1999-2000. in our opinion, the issue is squarely covered by the judgment of this court in lord's dairy farm ltd. in our opinion, therefore, even if duty drawback was available for the previous assessment year, what will be relevant was when the same is treated as bad debt by the assessee in his books of account.1. the present appeal can be considered on the following questions:(1) whether, on the facts and in the circumstances of the case and in law, the hon'ble income-tax appellate tribunal was justified in allowing the assessee's claim of non-refund of customs duty paid under section 20 of the customs act, 1962, as business loss under section 37(1) without appreciating the fact that the assessee had not submitted any documentary evidence, either before the assessing officer, the commissioner of income-tax (appeals) or the income-tax appellate tribunal, in respect of re-export of consignment and claim for refund of customs duty filed before the customs authorities?(2) whether, on the facts and in the circumstances of the case and in law, the hon'ble income-tax appellate tribunal was right in allowing the above expenditure as business expenditure under section 37(1) in the assessment year 1999-2000 when the assessee had no business during the year and the only source of income during the year was other income?2. a few facts may be set out. the assessee is exporter. he had exported certain goods which were returned and thereafter re-exported the goods. however, it was not in a position to furnish necessary documents as in the meantime the records of the assessee were lost on account of collapse of the building where the assessee maintained his records. it is the case of the assessee that they made attempts to reconstruct the records. however, as they were not in a position to reconstruct the records, they treated the said amount as bad debt for the assessment year 1996-97. the assessing officer disallowed the same against which an appeal was filed to the commissioner of income-tax (appeals). the learned commissioner (appeals) considering the facts on record allowed the claim of the assessee. the revenue preferred an appeal. that appeal came to be dismissed. consequently, the present appeal and the questions as framed.3. the contention as urged on behalf of the revenue is that the loss have been shown as bad debt for the financial year 1993-94 and not for the assessment year 1999-2000. in our opinion, the issue is squarely covered by the judgment of this court in lord's dairy farm ltd. v. cit reported in : [1955] 27 itr 700. in that case also there was defalcation between may, 1946, and april, 1947. the amount actually embezzled in the relevant accounting year 1st april, 1947, to 31st mach, 1948. the assessee therein claimed deduction in the assessment year 1947-48. the learned bench of this court was pleased to hold that as the assessee wrote of this amount in the year of account, the court was entitled to presume that the amount became irrecoverable when the assessee wrote it off in its books of account and that, therefore, the assessee was entitled to claim the amount. in our opinion, therefore, even if duty drawback was available for the previous assessment year, what will be relevant was when the same is treated as bad debt by the assessee in his books of account. considering the ratio of that judgment, in our opinion, there is no infirmity in the view taken by the commissioner of income-tax (appeals) and the income-tax appellate tribunal. that question, therefore, would not arise. in so far as the second question is concerned, merely because there was no income in the course of assessment year 1999-2000 would not disentitle the assessee from claiming the business expenditure in the said assessment year. we find no infirmity with the view taken by the commissioner of income-tax (appeals) and/or the income-tax appellate tribunal. in the light of that, we find no merit in the appeal. consequently, the appeal dismissed.