MADAN GOPAL BAGLA vs THE COMMISSIONER OF INCOME-TAX,WEST BENGAL.

The Supreme Court ruled that the loss incurred by the appellant, a timber merchant, due to paying off a loan taken by a third party (M) could not be claimed as a business loss under Section 10(2)(xi) of the Indian Income-tax Act, 1922. The court held that the appellant was not in the habit of standing surety for others in business, and thus the loss was classified as a capital loss rather than a business loss. The decision of the Calcutta High Court was upheld, distinguishing it from prior cases.