THE COMMISSIONER OF INCOME-TAX, BOMBAY CITY I vs M/S. JAGANNATH KISSONLAL, BOMBAY

The Supreme Court held that under Section 10(2)(XV) of the Indian Income Tax Act, 1922, a taxpayer can deduct losses incurred due to a co-borrower's failure to pay their share of a joint loan. The Court affirmed the High Court's decision that the respondent, having paid the entire loan amount due to Kishorilal's bankruptcy, was entitled to deduct the unpaid balance as a business loss. The judgment emphasized the established commercial practice of joint borrowing and mutuality in business financing.