COMMISSIONER OF INCOME-TAX, BOMBAY vs M/S. ABDULLABHAI ABDULKADAR

The Supreme Court held that the respondent, a registered firm acting as a commission agent for a non-resident principal, was not entitled to claim a deduction for a bad debt of Rs. 3,20,162 under Section 10(1) and Section 10(2)(xi) of the Indian Income-tax Act, 1922. The Court determined that the liability to pay income tax under Section 42(1) did not arise directly from the respondent's business activities, and thus the loss was not a permissible deduction. The High Court's decision was reversed, affirming that the loss was not a commercial loss incurred in the respondent's own business.