INDORE MALWA UNITED MILLS LTD., INDORE vs STATE OF MADHYA BHARAT AND OTHERS

The Supreme Court held that the loss incurred by the appellant company due to irrecoverable debts from its Managing Agents was deductible as a trading loss under Section 10(2) of the Indian Income-tax Act, 1922. The Court found that the Managing Agents' borrowings and subsequent investments were in accordance with the company's resolution, creating legal obligations. Therefore, the amounts became bad debts and were incidental to the company's business operations, allowing the appeal against the High Court's ruling that denied the deduction.