A loss is incidental to a business if it springs directly from the carrying on of the business and is not a loss sustained by the assessee even if it has a connection with the business.

TEK CHAND, J.

1. The question of law referred to the High Court by the Income-tax Appellate Tribunal, Delhi Bench, in this case is :

"Whether, on the facts and in the circumstances of the case, the loss of Rs. 9,300 arose in the ordinary course of, and incidental to, the assessees business and was, as such, a trading loss under section 10(1) of the Income-tax Act allowable in computing the business income ?"

2. The assessee is a registered firm of two partners with its head-office at Beri in Rohtak district and with branches in several places including the one at Calcutta. This firm used to transact business in foodgrains and other agricultural products on commission agency basis. The Calcutta branch earned a net commission agency basis. The Calcutta branch earned a net commission amounting to Rs. 58,246 in the assessment year 1956-57 for which the accounting year ended on 13th November, 1955. Prabhu Dayal was an employee of the assessees Calcutta branch and was sent with a sum of Rs. 9,300 in cash on 13th November, 1955, to the Punjab National bank Limited, Bara Bazar branch, Calcutta, for depositing the sum in the account of the assessee firm. A thief snatched from Prabhu Dayal the bundle containing the money and consequently a report was lodged with the police authorities. The culprit could not be traced and in the assessees books of account the amount of Rs. 9,300 was written off for the reason that the sum had been stolen. In the income-tax return the assessee firm claimed the amount as a trade loss. The Income-tax Officer in his order dated 23rd February, 1957, said that the assessee had failed to prove that the amount involved was necessarily for business purposes. Therefore, in the absence of any evidence produced by the assessee, he treated the amount as capital loss and added back Rs. 9,300. The assessee was unsuccessful in his appeal before the Appellate Assistant Commissioner expressed the view that the assessee had lost the cash which was not the stock-in-trade and, therefore, was not a revenue loss suffered. He did not disagree with the Income-tax Officer that the loss was not accidental and in the ordinary course of the business affairs, but even if it was so the Appellate Assistant Commissioner did not consider it to be a revenue loss and expressed the view that it partook of the nature of capital loss in the hands of the assessee. On these grounds he agreed with the Income-tax Officer that the assessee could not be allowed to set off this loss.

3. The Appellate Tribunal did not accept the assessees contention that the loss suffered arose in the course of the assessees business or was incidental thereto. The provisions of section 10(1) could not be attracted. The case of Lords Dairy farm Ltd. v. Commissioner of Income-tax, which was cited on behalf of the assessee, was held inapplicable and the Tribunal thought that the principle set down in Mulchand Hiralal v. Commissioner of Income-tax was fully applicable. Reliance was placed upon the observations of Courtney-Terrell C.J., who said :

"When money is stolen, the person from whom such money is stolen is parting with the money unwillingly or unknowingly and he cannot be said to lose the money for the purpose of earning such profits or gains".

4. Thus the contention, which is the subject-matter of this reference did not prevail before the Tribunal. The assessee then submitted his application requiring the Tribunal to refer the question of law reproduced above to this court.

5. Learned counsel at the Bar for the assessee and also for the department have cited a number of authorities, but they do not a call for discussion in any great detail. A duty is cast upon the assessee to prove necessary facts entitling him to claim deduction. It has to furnish proof as to how the deduction claimed is connected with its business or its profit. It was contended by to learned counsel for the department that no evidence has been furnished showing the connection of sum of