BEAUMONT, C. J. - The only point raised in this case arises in this way. An employee of the assessee Bank embezzled certain money and in respect of that embezzlement the whole income of the year 1935-36 was written off. That is to say, the embezzlement was treated as a loss, which could be set off against income.
The embezzlement was, no doubt, substantially more than the income of that year. In a subsequent year a sum is found to have been recovered in respect of that embezzlements, and it seems to me that the assessee, having alleged that the embezzlement was an embezzlement of income, which could properly be set off against income in previous year cannot affirm i another year that it was not income, and that a recovery in respect of its is a casual appreciation of capital, as he seeks to do. The assessee to pay cost.
I think, therefore, we must answer the question by saying that the net sum of Rs. 4,737 recovered from the heirs of Parvatikar is a revenue gain, and is assessable to tax out of the total income of the assessee for the assessment year.
We are now told that the money has, in fact, by a decision of this Court in appeal been held not to have been properly recorded; so that, in fact, it will not be brought into account, or be liable to tax.
The order of the Court has was as follows :
Upon the Reference of the Commissioner of Income-tax, Bombay, Sind and Baluchistan dated and eighteenth day of June one thousand nine hundred and forty one arising out of the order of the Appellate Assistant Commissioner of Income-tax S. D. Belgaum, in the above matter dated the twentieth day of June one thousand nine hundred and thirty nine on the ground mentioned in the application of the above named assessee the Union Bank of Bijapur and Sholapur Limited to the Commissioner of Income-tax BOmbay, Sind & Baluchistan, dated the twenty-ninth day of March one thousand and hundred and forty being this day called on for hearing and final disposal the said Commissioner and the said assessee appearing respectively by Advocates and upon reading the said Reference and the order passed on the twentieth day of JUne one thousand nine hundred and thirty nine by the said Appellate Assistant Commissioner of Income-tax, S. D. Belgaum, and upon hearing the said Advocates this Court Doth Answer the question referred to i the said Reference in the affirmative and Doth Declare that in the circumstances of the case the net sum of Rupees four thousand seven hundred and thirty seven out of the sum of Rupees eight thousand seven hundred and ninety recovered from the heirs of V. J. Parvatikar mentioned in the said Reference being part of the amount embezzled by him is a revenue gain and is assessable to tax as part of the total income of the assessee for the assessment year in question and this Court Doth Order that the said assessee do pay to the Commissioner of Income-tax Bombay, SInd and Baluchistan his costs of the Reference and of this order when taxed and noted in the margin hereof. Witness Sir John William Fisher Beaumount, Knight, Chief Justice at Bombay aforesaid this twenty-ninth day of September one thousand nine hundred and forty one.
Reference answered in the affirmative.