Not clear about loss occurred due to Embezzlement by Employees, the claim of Loss made by employee not allowable: ITAT [Read Order]

In the case of Aditya Birla Money Mart Limited, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that a claim of Loss made by the branch employee is not allowable when it is not clear about the loss occurred due to embezzlement by employees.

The Revenue challenged the action of CIT(A) in deleting the disallowance made on account of the assessee‟s claim of Rs.1,63,27,011/- on account of loss arising out of irregularities committed by certain employees.

The assesseehad claimed a loss of Rs 1,63,27,011/- on account of embezzlement made by its branch employee as a loss incurred in the regular course of business. The AO had disallowed the same on the ground that no details were furnished by the assessee during the course of the assessment proceedings. 

The assessee had incurred losses of Rs. 1,63,27,011/- on account of certain irregularities by a branch employee of the assessee and thus ought to be allowed as a business loss/ expenditure under section 28/37 of the income tax Act. The assessee made due disclosure of the said loss made in the accounts regarding the same and also in thenotes to the computation of income filed during the course of assessment proceedings.  

A Coram of Shri Vikas Awasthy, JM & Shri M Balaganesh, AM observed that the assessee had duly furnished the details of embezzlement loss before the CIT(A). Since it is not clear whether the losses had occurred due to embezzlement carried out by employees of the assessee or employees of ABML.

It was viewed that if the employee of ABML had done some mischief, then the said loss though borne by the assessee on behalf of the clients should have to be recovered from ABML by the assessee. The allowability of loss could be decided on the facts being brought on record in this regard. The Tribunal remanded the issue to the file of AO for decisionby the law.

Shri Yogesh Thar & Ms Ikshu Shah appeared for the assessee and Ms Shailaja Rai appeared for the revenue.

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