T.A. QUERESHI vs. COMMISSIONER OF INCOME TAX, BHOPAL

C.A. No.-005635-005635 - 2006Supreme Court06 December 20063 pages
For Petitioner: VIKAS MEHTAFor Respondent: B. V. BALARAM DAS
AI SummaryAllowed

What did the Supreme Court hold?

The Supreme Court held that the loss of stock-in-trade, even if it pertains to an illegal business, is allowable as a business loss on ordinary commercial principles. The explanation to Section 37 of the Income Tax Act, relating to business expenditure, was deemed not applicable.

What were the facts?

The assessee, a doctor, was found transporting and manufacturing heroin, which was seized. He claimed the loss of the seized heroin as a business loss for the assessment year 1986-87.

What were the issues?

Whether the loss of stock-in-trade from an illegal business is an allowable business loss, and if Section 37 of the Income Tax Act applies to such losses.

Which sections of the Income-tax Act were involved?

Section 37

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Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3 CASE NO.: Appeal (civil) 5635 of 2006 PETITIONER: Dr. T. A. Quereshi RESPONDENT: Commissioner of Income Tax, Bhopal DATE OF JUDGMENT: 06/12/2006 BENCH: S. B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T (Arising out of Special Leave Petition (Civil) No. 6939 of 2005) MARKANDEY KATJU, J.

Leave granted.

This appeal has been filed against the impugned judgment dated 29.11.2004 passed by the Madhya Pradesh High Court in I.T.A. No. 33 of 1999. Heard learned counsel for the parties and perused the record.

The appellant is an assessee. He is a doctor by profession at a place called ’Garoth’ in District Mandsaur. On 18.7.1985, CBI sleuths arrested the appellant while transporting a huge quantity of contraband article (the narcotic drugs heroin) in a Jeep (Jonga) RSO 3592. This led to further raid in his residential premises. In this raid, one clandestine laboratory to manufacture heroin powder along with several contraband drugs was recovered. All these contraband articles were seized and proceedings under the NDPS Act were initiated against the assessee. We are not concerned wit

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