The main legal point established in the judgment is that the loss incurred by theft of stock-in-trade should be allowed for in computing the income-tax if it is connected with or arising out of the trade or business and is incidental to the business.

Beasley, C.J.

1. The facts in this case have been sufficiently set out in the answers to the question referred to us of my learned brothers Anantakrishna Ayyer and Curgenven, JJ., which I have had the advantage of seeing and I therefore do not propose to state them. Tie question seems to me to resolve itself into one as to whether the loss sustained by the assessee in this case was one which can be described as incidental to his business. If it was, then he is entitled to have his profits upon which he is liable to pay income-tax reduced by the amount of that loss. It was argued for the assessee: (1) that the robbery of the assessees money was one which was incidental to his business of a money lender; and (2) that the money stolen was his "stock-in-trade" because it was money which, had it not been stolen, was available to him for the purpose of lending to borrowers and making a profit thereby. There is no evidence in this case that this sum was "stock-in-trade" at all and the money would seem to me to be capital plus the profits collected by the assessee. If this money was capital, then the assessee would not be entitled to a deduction on account of its loss. So far as the money stolen was the profit of the assessee, unless it can be shown that its loss was incidental to the business he carried on, he cannot claim a deduction in respect of it. If anyone is paid a sum due to him as profits and he puts that in his pocket and on his way home is robbed of it, it would be, I think, difficult to contend that such a loss was incidental to his business. Still more so when he has reached his home and put these profits in a strong-room or some other place regarded by him to be a place of safety.

2. I can well understand that in cases where the collection of profits or payment of debts due by, is entrusted to a gumastah or servant for collection and that person runs away with the money or otherwise improperly deals with it, the assessee should be allowed a deduction because such a loss as that would be incidental to his business. He has to employ servants for the purpose of collecting sums of money due to him and there is the risk that such servant may prove to be dishonest and instead of paying the profits over to him convert them to his own use. But I cannot distinguish the present case from the case of any professional man or trader who, having collected his profits, is subsequently robbed of them by a stranger to his business. In this case none of the thieves were the then servants of the assessee although one of them had formerly been his cook. This is no doubt a very hard case and, whilst I have every sympathy with the assessee, I am unable to answer the question except in the negative. The question referred to us is rather too general, but upon the facts of this case which, in my opinion, are not at all adequately set out, that must be my answer. The result is that the answer of this Full Bench is in the negative and the assessee is directed to pay the costs of the Income-tax Commissioner which we fix at Rs. 250.

Anantakrishna Ayyar, J.

3. I have the misfortune in this case to differ from the opinion of my Lord the learned Chief Justice, and of my learned brother Curgenven, J. The question referred for our decision under Section 66, Income-tax Act is Whether the loss incurred by theft of money used in the money-lending business, and in the business premises should be allowed for in computing the income-tax.

4. The question raised is one of very great importance, and the case is one of first impression, no case directly deciding the point having been brought to our attention.

5. One should have liked that more facts were available; the facts, as they appear in the records before us, are the following:

6. The petitioners are a registered firm of Nattukottai Chettis carrying on money-lending business at Karaikudi and other places in British India, and at Kualalampur in the Federated Malay States, the headquarters being at Karaikud