HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Badridas Daga v. Commissioner of Income-tax
Civil Appeal 149 of 1956
[1959] SCR 690 ·
Indian Income-tax Act 1922, sections 10(1), 10(2)(xi) and 10(2)(xv)
Sources & disclosures includedDownload original judgment / order
3-judge bench · T. L. Venkatarama Aiyar · P. B. Gajendragadkar · A. K. Sarkar
Assessment years: Misappropriation in November 1944; assessment year not expressly identified
01 · Facts of the case
An agent managing the proprietor’s money-lending, shares and commission business misappropriated bank funds under broad operating authority. After recovery proceedings and partial realisation the balance was written off; deduction was denied as non-trading loss.
Source: Primary report: SCR 691–693
02 · Discussion by the Hon’ble Court
The loss was neither contractual bad debt nor expenditure laid out for business. Nevertheless section 10(2) deductions were not exhaustive: commercial profit computation under section 10(1) recognised a loss directly incidental to carrying on business. This agent’s authorised bank role supplied the connection; actual withdrawal to make a business advance was unnecessary.
Source: Primary report: SCR 693–702
03 · Judicial decision
Lower court order set aside; reference answered affirmatively, with costs in this Court and below.
Source: Primary report: SCR 702
04 · Outcome / in whose favour
Assessee succeeded: the misappropriation loss was deductible in computing business profits under section 10(1).
Source: Primary report: SCR 702
05 · AKHB REVIEW POINT
Document the agent’s authority, business ownership of funds, loss and recovery evidence. The Court expressly distinguishes losses merely affecting the owner’s funds from those arising directly in business; this is not universal deductibility of every theft.
Source: Primary report: SCR 695–701
Source & verification
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Statutory scope
Historical legislation expressly identified in this note. This is not a decision under the Income-tax Act, 1961 or the Income-tax Act, 2025. Verify enacted wording, commencement, transition and subsequent judicial treatment independently before modern reliance.
Later treatment
Source checked 2026-10-23. Subsequent treatment and present-law applicability have not been comprehensively checked.
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General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. AKHB REVIEW POINT is editorial analysis, not the Court’s holding.