Dr. T.a. Quereshi v. Commissioner Of Income Tax, Bhopal

Case: DR. T.A. QUERESHI versus COMMISSIONER OF INCOME TAX, BHOPAL [[2006] SUPP. 10 S.C.R. 311] (2006) डॉ. टी. ए. कुरैशी वी. आयकरआयुक्त, भोपाल 6 दिसंबर, 2006 औरमार्कंडीकाटजू, जे. जे.] [ S.B.SINHA -आयकरअधिनियम, 1961-व्यवसाय/पेशेकेलाभऔरलाभकीगणनाहेरोइनकेनिर्माणऔरबिक्रीमें-लगेनिर्धारितीजब्ती ---न्यायशास्त्रकानूनीसिद्धांतबनामनैतिकताआयोजितःकानूननैतिकतासेअलगहैअदालतकोकानूनीसिद्धांतोंपरमामलोंकाफैसलाकरनाहोताहैनकिअपनेनैतिकविचारोंपर।इसअपीलमेंविचारकेलिएजोसवालउठायागयाथा, वहयहथाकिक्यानिर्धारितीयहदावाकरसकताहैकिउसकेपाससेजब्तकीगईहेरोइनव्यापारमेंउसकेस्टॉककाहिस्साहैऔरइसलिएजब्तीकेकारणइसकानुकसानउसकेलाभऔरलाभकीगणनाकरतेसमयएकव्यावसायिकनुकसानकेरूपमेंएकस्वीकार्यकटौतीहै। व्यवसाय/पेशा। अपीलकोअनुमतिदेतेहुए,न्यायालयने पकड़नाः1.1 . आयकरअधिकारियोंनेएकनिष्कर्षदर्जकियाकि निर्धारितीहेरोइनकेनिर्माणऔरबिक्रीमेंलगाहुआथा।एकबारतथ्यकेइसतरहकेनिष्कर्षकोदर्जकरनेकेबाद, यहपताचलताहैकिइसतरहकेव्यवसायसेकोईभीनुकसानएकव्यावसायिकनुकसानहै।न्यायाधिकरणनेएकनिष्कर्षदर्जकियाजोनिर्धारितीकररहाथा हेरोइनकेनिर्माणऔरबिक्रीकाव्यवसायऔरयहकिजब्तकीगईहेरोइनव्यापारमेंनिर्धारितीकास्टॉकथा।इसनिष्कर्षकोध्यानमेंरखतेहुए, न्यायाधिकरणनेसहीकहा हेरोइनकेनुकसानकोव्यावसायिकनुकसानकेरूपमेंघटानेकेनिर्धारितीकेदावेकीअनुमतिदी।[ 314- जी-एच; 325-ए) 1.2 . आयकरअधिनियम, 1961 कीधारा37 इसपरलागूनहींहोतीहै- तत्कालमामलाक्योंकिधारा37 व्यावसायिकव्सेसंबंधितहै, औरतत्काल 311 312 आर। मामलाव्यावसायिकव्सेनहींबल्किव्यावसायिकनुकसानसेसंबंधितहै।लाभकीगणनामेंसामान्यवाणिज्यिकसिद्धांतोंपरव्यावसायिकनुकसानस्वीकार्यहैं।एकबारजबयहपायाजाताहैकिजब्तकीगईहेरोइनकेव्यापारमेंस्टॉककाहिस्साथा निर्धारिती, यहबताताहैकिव्यापारमेंऐसेस्टॉककीजब्तीऔरजब्तीकोव्यावसायिकनुकसानकेरूपमेंअनुमतिदीजानीचाहिए।व्यापारमेंस्टॉककेनुकसानकोव्यापारिकनुकसानमानाजानाचाहिए।इसप्रकार, उच्चन्यायालयकेफैसलेकोकायमनहींरखाजासकताहैऔरइसेदरकिनारकरदियाजाताहैऔर--न्यायाधिकरणकेआदेशकोबहालकरदियाजाताहै।[ 315 - जीएच; 316-एबीआई सी. आई. टीवी. प्यारासिंह, आकाशवाणी(1980) एससी1271 औरआयकरआयुक्तबनाम।अन्नामलाईचेट्टियार, ए. आई. आर. (1973) एस. सी. 1032 परभरोसाकिया। 2. उच्चन्यायालयनेइसकेबजायभावनात्मकऔरनैतिकदृष्टिकोणअपनायाहै कानूनीदृष्टिकोण।उच्चन्यायालयकाआदेशजोनिर्धारितीकररहाथा हेरोइनकेअवैधनिर्माणऔरबिक्रीमेंएकअत्यधिकअनैतिककार्यकोबरकराररखाजाताहै।हालाँकि,मामलोंकानिर्णयन्यायालयद्वाराकानूनीसिद्धांतोंपरकियाजानाहैनकिअपनेस्वयंकेनैतिकविचारों-पर।कानूननैतिकतासेअलगहै।[ 315 - एफजी] सिविलअपीलीयन्यायनिर्णयः2006 कीसिविलअपीलसं. 5635। मध्यप्रदेशउच्चन्यायालय(इंदौरपीठ) केअंतिमनिर्णयऔरआदेशदिनांक29.11.2004 सेI. T. A.सं. 33/1999 में। एम. एल. वर्मा, इंदुमल्होत्राऔरविकासमेहताऔरसत्यमित्रा अपीलार्थी। प्रतिवादीकेलिएके. पी. पाठक, ए. एस. जी., टी. ए. खानऔरबी. वी. बलरामदास। न्यायालयकानिर्णयइसकेद्वारादियागयाथा मार्कंडेयकाटजू,जे.लीवमंजूर। यहअपीलदिनांकितविवादितफैसलेकेखिलाफदायरकीगईहै 29.11.2004 मध्यप्रदेशउच्चन्यायालयद्वारा1999 केआई. टी. ए. सं. 33 मेंपारित। पक्षोंकीओरसेविद्वानोंकीसलाहसुनीऔरअभिलेखकाअध्ययनकिया। अपीलार्थीनिर्धारितीहोताहै।वहपेशेसेमंदसौरजिलेमें"गारोथ" नामकस्थानपरडॉक्टरहैं।आई. डी.1 पर, सी. बी. आई. केअधिकारियोंनेअपीलार्थीकोजीप(जोंगा) आर. एस. ओ. 3592 मेंभारीमात्रा मेंप्रतिबंधितवस्तु(मादकपदार्थहेरोइन) लेजातेसमयगिरफ्तारकिया।इसकेकारणउनकेटी. ए. कुरैशीपरऔरछापामारागयाः ।आयकर, भोपालःमारकंडेयकाटजू, जे.] 313 COMMNR हेरोइनपाउडरकेसाथकईप्रतिबंधितदवाएंबरामदकीगईं।येसबप्रतिबंधितवस्तुओंकोजब्तकरलियागयाऔरएन. डी. पी. एस. अधिनियमकेतहतकार्यवाहीकीगई निर्धारितीकेखिलाफशुरूकियागया।हमइनकार्यवाहीसेचिंतितनहींहैं। जहाँतकआयकरअधिनियमकेतहतकार्यवाहीकासंबंधहै, जिसकाहमसंबंधरखतेहैं, निर्धारिती-अपीलार्थीनेनिर्धारणवर्ष1986-87 केलिएअपनाविवरणीदाखिलकिया।इसआकलनमेंनिर्धारितीनेदावाकियाकिचूंकिउससेजब्तकीगईहेरोइनव्यापारमेंउसकेस्टॉककाहिस्साहै, इसलिएजब्तीकेकारणइसकानुकसानउसकेलाभऔरव्यवसाय/पेशेकेलाभकीगणनाकरतेसमयएकस्वीकार्यकटौतीहै।मूल्यांकनअधिकारीदिनांक28.3.1989 केआदेशद्वारा निर्धारितीकेतर्ककोस्वीकारनहींकियाऔररुपयेकीराशिजोड़ी। 5,50,000 / - , सेआयकेरूपमेंजब्तकीगईहेरोइनकामूल्यांकनमूल्यहोना न्यायाधिकरणकेसमक्षदूसरीअपीलदायरकी।इसकेदिनांकित31.3.1993 आदेशकेअनुसारन्यायाधिकरणनेजब्तकीगईहेरोइनकामूल्यघटाकर2 लाखरुपयेकरदिया, लेकिनऐसाकरनेसेइनकारकरदिया Case: DR. T.A. QUERESHI versus COMMISSIONER OF INCOME TAX, BHOPAL [[2006] SUPP. 10 S.C.R. 311] (2006) DR. T. A. QUERESHI v. COMMISSIONER OF INCOME TAX, BHOPAL A DECEMBER 6, 2006 [S.B. SINHA AND MARKANDEY KA TJU, JJ.] B Income Tax Act, 1961-Computation of profits and gains of business/ profession-Assessee engaged in manufacture and selling of heroin-Seizure of heroin-Deduction, claim of-Applicability of section 37-Held: Seizure C of heroin formed part of stock in trade of assessee-Thus, entitled to claim deduction as a business loss on account of seizure-Section 37 relates to business expenditure, thus not applicable-Section 37. Jurisprudence-Legal principles vis-a-vis morality-Held: Law is different from morality-Court has to decide cases on legal principles and D not on one's own moral views. The question which arose for consideration in this appeal was whether the assessee could claim that the heroin seized from him formed part of his stock in trade and hence its loss on account of seizure is an allowable deduction as a business loss while computing his profits and gains of E business/profession. Allowing the appeal, the Court HELD: 1.1. The Income Tax authorities recorded a finding that the assessee was engaged in manufacture and selling of heroin. Once such a F finding of fact is recorded, it follows that any loss from such a business is a business loss. The tribunal recorded a finding that the assessee was doing the business of manufacture and sale of heroin and that the heroin seized was the assessee's stock in trade. In view of this finding, the tribunal rightly allowed the assessee's claim of deducting the loss of heroin as a business G loss. (314-G-H; 315-A) 1.2. Section 37 of the Income Tax Act, 1961 has no application to the instant case since section 37 relates to business expenditure, and the instant SUPREME COURT REPORTS [2006) SUPP. 10 S.C.R. A case does not deal with business expenditure but with business loss. Business losses are allowable on ordinary commercial principles in computing profits. Once it is found that the heroin seized formed part of the stock in trade of the assessee, it follows that the seizure and confiscation of such stock in trade has to be allowed as a business loss. Loss of stock in trade has to be considered B as a trading loss. Thus, the judgment of High Court cannot be sustained and is set aside and the order of tribunal is restored. (315-G-H; 316-A-B) C/Tv. Piara Singh, AIR (1980) SC 1271 and Commissioner of Jncome-Tax v. S.N.A.S.A. Annamalai Chettiar, AIR (1973) SC 1032, relied on. C 2. High Court has adopted an emotional and moral approach rather than a legal approach. The High Court's order that the assessee was committing a highly immoral act in illegally manufacturing and selling heroin is upheld. However, cases are to be decided by Court on legal principles and not on one's own moral views. Law is different from morality. 1315-F-G) D CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5635 of2006. From the final Judgment and Order dated 29.11.2004 of the High Court of Madhya Pradesh (Indore Bench) in LT.A. No. 33/l999. M.L. Verma, Indu Malhotra and Vikas Mehta and Satya Mitra for the E Appellant. K.P. Pathak, A.S.G., T.A. Khan and B.V. Balaram Das for the Respondent. F The Judgment of the Court was delivered by MARKANDEY KA TJU, J. Leave granted. This appeal has been filed against the impugned judgment dated 29.11.2004 passed by the Madhya Pradesh High Court in LT.A. No. 33 of 1999. G Heard learned counsel for the parties and perused the record. The appellant is an assessee. He is a doctor by profession at a place called 'Garoth' in District Mandsaur. On 18.7.1985, CBI sleuths arrested the appellant while transporting a huge quantity of contraband article (the narcotic H drugs heroin) in a Jeep (Jonga) RSO 3592. This led to further raid in his Case: DR. T.A. QUERESHI versus COMMISSIONER OF INCOME TAX, BHOPAL [[2006] SUPP. 10 S.C.R. 311] (2006) +>. ra. ). oH ਵJ.nh 1akeSaWas, 1961 - !-2>0Oਲ>-uyਲ>-ay,/*OਸO0> - HBASਲੱ!OlegOCSYESYZ2oge70O0JTDG:->,.TGS.-, eiht,0J-ਲ>!L/K!.>0OHOS'dl 37-NIG TS: 0L0>0O0>.;ੱ:>,-JTIGESfedHal"0>ਵ*>0HB'AE:-=p.0ਹ>, ooJad>,.J0OloLeaToytwreaayaes0>roi hag- 1>0> 37 aToyT2>ਲ:,z1.;PAdo", oA.0ਹ>2;J-HaHSਲ>!L tony-ਸ>:.0-_ was"HATalyas7 - 0ੱ Jge: _ wasਵੱ 0>;PAalgast.K - UON"S2OoHT0>+P:ਲ>AdOBe5 _ =z '.O"FICYZto '.O2;JMTLalalead) 0:ਵ>ਲ—ਉTomBufegrgfogfeMIs:JiIHS'aecomeragHac;PToGH.K>,.attaeade0>.;ੱ:>:JCHdHe'd0>fogਵ*>0n>epBufa0>ox— Pa'.O >.>0O0L0>;Pfof?2>L0aoafaeuatdurgel— PudetaAid £9 =GHਲ>-wyਲ>-0O atgyrg/*OਸO। ;Kਲ+: 1.1. tSaHSalwhats2OfoyacaraltfoHo'ASਲੱ!OJs:2foade0>.20?>-Nigf2zactfaਵ>0WraySਲੱ-->0O.ੱ/;Pcor, fa2Lz0J*>ਲ->age!;PCJabtਵJex Pal.KWire}folada;P.adaex Pal0ad =2Ofga'gJ.ਲੱ-->CJ0JHo'aS:J.20?>-ief2zac0>atdurgada!aoewa=)ad fa>,.alst:J0JHS'AEage!;PHc'aਵ*>0fg]fe.0?ਸ0Ofeਲੱ-->, 0J4 4:;Jfasts0JHS'AEagtc;Pelit0Oact0Jox— Pa0OadefaqeSTJaI SANS (314-amo; 315- s) 1.2 1>0> 37 MSaHcannae0O, 1961 0JaH“onl2;J;P.K0z.addBuoan.KNOS"dI37:z,z.1.;P2Lzatdurd-fel,nS0J.K0z.aHage;P2;J:L0>2>ਲasadBadu*02>ਲatayyroQAO?euUidox— Pa;2?2>L0;P '.OYTeuigaMAOfgUTEਲ>-fioਵ>0fe;PUTfoCJ0Jsae>,.ats.;ੱ:>Setar0O0JHec'fogਵ*>00JHoeAg";P, fe0J*>ਲ->aged;PCJ0J0L0>Wo>,.0OWheHelafogਵ*>0;P;K-ਵ>ਲ>farts.0ੱ.JfaefioagarQAOQAHO0OHec'feਵ*>0add!;P;K->?zTSofaeSਵ*>00> QSA'O!|fo.0ਹ>, 0J.20->0OਉrMe SS2;JAgHac;K->alfeno;P=Fri*>:OnS0JWMds0O4d 4;P,;>ਲatst| (315-ao; 316-v- ,J) Hl/at.etALT.:z", Hyg (1980) WAT 1271 n>STHHAaBAGHSa,2>?Nip= py praMATHSorg, SHyrg (1973) WAT 1032, '.O-0K:>ats। 2. 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OTHA:/>2 '.Osidde;P। 18.7.1985 2Lz , Ares0OwWoetgmi2OmMiisags2Lz.!?+.>0adfanetalWretaTs.ਵਸ>ਲ?>.0>0O*>,z0JਲO (0J2ਸJਲO*0>0/2ਸOdda) fegstu (di) Mi.WH.ਓ3592 feWoTeT2LzWISiufegGH0OfoITEHTTHISfafegSUTfre!K*.*?/K!ਸ>ਲ>2LzSSUESSoSau*>,z0JਸK0>0O2>ਲuUgsT2ਸO,0>?0alsdr;2।J]:-fsduaਲO :2>,.atsWSat gempyMOS]0Jns.+J.*J.WAnioਸK0Laltsge:2.ਵ0Kੱ10JHoeAgtc;P।HT;22;J:,z1.2>ਲJ]atgem| ;K-saatgemmytWUOT0JYWHHaaNo0K,>0>:,z1., faH2>ਲWHT;2:,z1., 0JHS'aAS-mluiisagSISolstCASTਵ>*:JSucl HSide:>ਲ 1986-87।fHHS'aAEfegHo's!2OcMNMeolsfafagtaGH.K>,.alsESsrelisਵ*>0feoGH0OAc'a0>.;ੱ:>;P, THU>,.Ado0Oadofo0>ox— PaGH0O?K2>+OWSਲ>->0J!-2>adeJefro?2>L0act;P।0Oatdug/*OਸO. 0HS'AEWoatdt2>ਲNYid.?.J28.3.1989 2Oats2;JHeadadi0JSdla0O0JHS'aSAdd!;PNWdtamrfopirai0O0K 5,50,000/-, >,.alsseSoS0>Hodes?Kੱਲ;K-ada’, WsdCH:0K..KWHSSHHo'aEecd!arogMTSfogApyarS (MTS) 2OHoe0OMH2Lzuadad'gfWoeSHMHcd!.?.J 1.2.1990. .+0HStaS!2Ofd =wr)cnMTSSUSEatst|ad =0O 31.3.1993 0OYS]SAHcD"wetfaTou0J?Kੱਲ0O0JJae>,.oara2Lz 2 guyਲੱ , *0fasardd.0ੱ.>2Lzace=afo0JJdd.K0JHo'aSAdd;PMATHhaesatdgurgQAHA, .KFa =0OMOH'dJHS'aS2O(T2LzatdurdwrSeHcel2;Jats:J.JSita, b= Lfeo '.OfoNUSTAHS!MOS]MOS dd 254(2) 0Fa =cd!WY G.?.J 26.4.1994 HeardarsCJ0JHodesagtc;P:Jfeo.ੱ/cMe)hatsfafro0O.L0.OOAH'O, aN TASrrfeਵ>*:Botefa0>NYid.?.J31.3.1993. Wo ddi, dA =2>ਲNYid.?.J 14.10.1998 fay.0ੱ.J0JMUSNeyWtf asCJ0JHS'AEAdd!;P0>Jaud;PcMmMeAddBuacafro0O.L0.OatdgurgOAH};K0fogਸ,0>, Fa =0>fegig:Jfadeo.K>,.Add0OSaineHਵ*>0fogflmrgy fry, 124 eretcturg. 40, fefaGas das ds fed 2 Sy gue dt adst ot ferns festWHES UU Sides ade J! fed J fed fed fen ¢ ot fefaGas Cg Wem HfgAA ats veut HSafg ats ot unis vial ot Ou ness A, fad Shimer farr 3 Gug, At aes ats Set nifSHHeel '3 ul Jo fa HSS aga wT: 1.atAdr!0OSeNisrfegCeyet0O*?,z10JNS.+J.*J.WHno?, 1985 adHac;2;K->faraoats2Lz;K->He'dNeyਵ*>00OaS;PsHstasmfaniT? Case: DR. T.A. QUERESHI versus COMMISSIONER OF INCOME TAX, BHOPAL [[2006] SUPP. 10 S.C.R. 311] (2006) निर्धारितीकेतर्ककोस्वीकारनहींकियाऔररुपयेकीराशिजोड़ी। 5,50,000 / - , सेआयकेरूपमेंजब्तकीगईहेरोइनकामूल्यांकनमूल्यहोना न्यायाधिकरणकेसमक्षदूसरीअपीलदायरकी।इसकेदिनांकित31.3.1993 आदेशकेअनुसारन्यायाधिकरणनेजब्तकीगईहेरोइनकामूल्यघटाकर2 लाखरुपयेकरदिया, लेकिनऐसाकरनेसेइनकारकरदिया निर्धारितीकीआयसेइसराशिकोव्यावसायिकहानिकेरूपमेंकाटलें, क्योंकिन्यायाधिकरणकेअनुसारनिर्धारितीनेइसेव्यावसायिकहानिकेरूपमेंदावानहींकियाथा।हालाँकि, बादमेंधारा254 (2) केतहतएकआवेदनपरन्यायाधिकरणनेदिनांक1 केआदेशद्वारास्वीकारकियाकिनिर्धारितीनेवास्तवमेंइसेनुकसानकेरूपमेंदावाकियाथा, औरपरिणामस्वरूपउसने2 केअपनेआदेशकोवापसलेलिया।अंततःन्यायाधिकरणनेदिनांक14.10.1998 केआदेशद्वाराअपीलकीअनुमतिदीऔरअभिनिर्धारितकियाकि निर्धारितीव्यावसायिकहानिकेरूपमेंकटौतीकादावाकरनेकाहकदारहै।दूसरेशब्दोंमें, न्यायाधिकरणकाविचारथाकिचूंकिजब्तीकेपरिणामस्वरूपव्यापारमेंनुकसानहुआहै, इसलिएइसन्यायालयद्वारासी.आई. टी. v. मेंनिर्धारितकानूनपरभरोसाकरना।पियारासिंह, 124 आई. टी. आर. 40, न्यायाधिकरणनेसकलआयमेंसे2 लाखरुपयेकीकटौतीकीअनुमतिदी। निर्धारितीकीकुलआय।यहन्यायाधिकरणकेइसदृष्टिकोणकेखिलाफहैकिराजस्वनेव्यथितमहसूसकियाऔरउच्चन्यायालयकेसमक्षअपीलदायरकी, जिसे, जैसाकिऊपरकहागयाहै, कानूनकेनिम्नलिखितप्रश्नोंपरअंतिमसुनवाईकेलिएस्वीकारकियागयाथाः क्याप्रावधानकेउल्लंघनमेंहेरोइनरखना 1. एन. डी. पी. एस. अधिनियम, 1985 कोएकचिकित्साव्यवसायीकेस्वामित्वमेंस्टॉकऔरव्यापारमानाजासकताहै? 2. क्याऐसेचिकित्साव्यवसायीकोकटौतीकरनेकीअनुमतिदीजासकतीहै रु. 2 हेरोइनकेऐसेभंडारसेव्यापारकेदौराननुकसानकेरूपमेंलाखों? क्याआयकरअपीलीयन्यायाधिकरणद्वारापारितआदेश, आदि। आई. टी. मेंइंदौरबेंच-मूल्यांकनवर्ष1986-87 केलिए272/89-90 314 है। आर। अनुचितऔरअवैध? विवादितआदेशद्वाराउच्चन्यायालयनेअपीलकोस्वीकारकरलियाऔरन्यायाधिकरणकेआदेशकोरद्दकरदिया।इसलिएयहअपीलकीगईहै। अपनेफैसलेकेपैराग्राफ7 में, उच्चन्यायालयनेइसपरभरोसाकियाहै- आयकरअधिनियमकीधारा37 कास्पष्टीकरणजिसमेंकहागयाहैः " धारा37-स्पष्टीकरण-शंकाओंकोदूरकरनेकेलिए, एतद्द्वारायहघोषितकियाजाताहैकिकिसीनिर्धारितीद्वाराकिसीऐसेउद्देश्यकेलिएकियागयाकोईभीव्जोअपराधहैयाजोकानूनद्वारानिषिद्धहै, व्यवसाययापेशेकेउद्देश्यकेलिएकियागयानहींमानाजाएगाऔरऐसेव्केसंबंधमेंकोईकटौतीयाभत्तानहींदियाजाएगा। अपीलार्थीश्रीएम. L.Verma केविद्वानवरिष्ठवकीलनेतर्कदिया किअधिनियमकीधारा37 काइसमामलेमेंकोईअनुप्रयोगनहींहैक्योंकिधारा37 व्यावसायिकव्सेसंबंधितहै, औरइसमामलेमेंहमव्यावसायिकव्सेनहींबल्किव्यावसायिकनुकसानसेसंबंधितहैं।हमइसतर्कसेसहमतहैं। इसमेंकोईसंदेहनहींहैकिनिर्धारितीनेशुरूमेंआयकरअधिकारियोंकेसमक्षयहसंतोषषव्यक्तकियाथाकिअफीमसेहेरोइनबनानेकेउपकरणनेऐसाकियाथा निर्धारितीसेसंबंधितनहींहै, बल्किएकवी. टी. मदनसेसंबंधितहै।हालांकि, मूल्यांकनअधिकारीइसतर्कसेसहमतनहींथेऔरन्यायाधिकरणनेअपनेपहलेकेआदेशमें(अपनेआदेशकेपैराग्राफ7 में) एकनिष्कर्षदर्जकियाहैकिनिर्धारितीसामग्रीलाभकेलिएहेरोइनकेनिर्माणऔरबिक्रीमेंशामिलथा।इसप्रकार, आयकरअधिकारियोंद्वारायहअभिनिर्धारितकियागयाहैकिअपीलार्थीहेरोइनकेनिर्माणऔरउसेसामग्रीकेरूपमेंबेचनेमेंलगाहुआथा लाभहोताहै।इसमेंकोईसंदेहनहींहैकिनिर्धारितीनेतर्कदियाथाकिवहकेवलअपनेचिकित्सापेशेसेआयअर्जितकररहाथाऔरकोईअवैधगतिविधिनहींकररहाथा। हेरोइनकानिर्माणऔरबिक्री।हालाँकि, न्यायाधिकरणकेदिनांकित31.3.1993 केआदेशमेंतथ्यकानिष्कर्षयहहैकिनिर्धारितीहेरोइनकेनिर्माणऔरबिक्रीमेंलगाहुआथा।इसप्रकारआयकरअधिकारियोंनेस्वयंएकनिष्कर्षदर्जकियाहैकिनिर्धारितीहेरोइनकेनिर्माणऔरबिक्रीमेंलगाहुआथा।इसमेंकोईसंदेहनहींहैकिन्यायाधिकरणकेदिनांकित31.3.1993 केआदेशकोबादमेंन्यायाधिकरणद्वारावापसलेलियागयाथा, लेकिनतबसेअंतिमआदेशदिनांकितथा। 14.10.1998 न्यायाधिकरणनेअभिनिर्धारितकियाहैकिजब्तकीगईहेरोइनव्यापारमेंनिर्धारितीकास्टॉकथा, यहनिहितहैकिन्यायाधिकरणनेयहविचारदोहरायाकिनिर्धारितीहेरोइनकेनिर्माणऔरबिक्रीकाव्यवसायकररहाथा। एकबारजबआयकरअधिकारीतथ्यकेइसतरहकेनिष्कर्षकोदर्जकरतेहैं, तोयहT.A.QUERESHI v "होताहै। . COMMNR।आयकर, भोपाल[मार्कंडेयकाटजू, जे.] 325 इसप्रकारहैकिइसतरहकेव्यवसायसेकोईभीनुकसानएकव्यावसायिकनुकसानहै। इसमामलेकेतथ्यइसन्यायालयकेफैसलेसेपूरीतरहसेजुड़ेहुएहैं। सी. आई. टी. वी. प्यारासिंह, ए. आई. आर. (1980) एस. सी. 1271 जोएकनिर्धारितीकामामलाथा।तस्करीगतिविधिकोआगेबढ़ातेहुएऔरइसन्यायालयनेमानाकिइससेहोनेवालानुकसान मुद्रानोटोंकोजब्तकरनेकीअनुमतिव्यावसायिकनुकसानकेरूपमेंदीजानीचाहिए। न्यायाधिकरणकेदिनांक14.10.1998 केआदेशमेंतथ्यकानिष्कर्षहै Case: DR. T.A. QUERESHI versus COMMISSIONER OF INCOME TAX, BHOPAL [[2006] SUPP. 10 S.C.R. 311] (2006) This appeal has been filed against the impugned judgment dated 29.11.2004 passed by the Madhya Pradesh High Court in LT.A. No. 33 of 1999. G Heard learned counsel for the parties and perused the record. The appellant is an assessee. He is a doctor by profession at a place called 'Garoth' in District Mandsaur. On 18.7.1985, CBI sleuths arrested the appellant while transporting a huge quantity of contraband article (the narcotic H drugs heroin) in a Jeep (Jonga) RSO 3592. This led to further raid in his residential premises. In this raid, one clandestine laboratory to manufacture A heroin powder along with several contraband drugs was recovered. All these contraband articles were seized and proceedings under the NDPS Act were initiated against the assessee. We are not concerned with these proceedings. So far as proceedings under the Income Tax Act ~re concerned, with which we are concerned, the assessee-appellant filed his return for the B Assessment Year 1986-87. In this assessment the assessee claimed that since the heroin seized from him forms part of his stock in trade hence its loss on account of seizure is an allowable deduction while computing his profits and gains of business/profession. The Assessment Officer by order dated 28.3.1989 did not accept the contention of the assessee and added a sum of Rs. C 5,50,0001-, being the assessed value of the heroin seized, as an income from undisclosed source. In appeal filed by assessee the CIT (Appeal) upheld the order of Assessment Officer by his order dated 1.2.1990. The assessee then filed a second appeal before the Tribunal. By its order dated 31.3 .1993 the Tribunal reduced the value of the heroin seized to Rs.2 lacs, but refused to deduct this amount from the assessee's income as a business loss, since D according to the Tribunal the assessee had not claimed it as a business loss. However, subsequently on an application under Section 254(2) the Tribunal by order dated 26.4.1994 accepted that the assessee had in fact claimed it as. a loss, and consequently it recalled its order dated 31.3.1993. Ultimately, the Tribunal by order dated 14, l 0.1998 allowed the appeal and held that the E assessee is entitled to claim the deduction as a business loss. In other words, the Tribunal was of the view that since the seizure has resulted in loss in trade hence, relying upon the law laid down by this Court in CIT v. Piara Singh, 124 ITR 40, the Tribunal allowed the deduction of Rs.2 lacs out of the gross total income of the assessee. It is against this view of the Tribunal that the revenue felt aggrieved and filed the appeal before the High Court which, as F stated above, was admitted for final hearing on the following questions of law: 1. Whether possession of heroin in contravention of provision of the NDPS Act, 1985 can be treated to be stock and trade possessed by a Medical Practitioner ? G 2. Whether such Medical Practitioner can be permitted to deduct Rs. 2 lacs from such stock of heroin as loss during the trade ? 3. Whether the order passed by the Income Tax Appellate Tribunal, Indore Bench in IT-272/89-90 for Assessment Year 1986-87 is H SUPREME COURT REPORTS [2006) SUPP. 10 S.C.R. A perverse and illegal ? By the impugned order the High Court allowed the appeal and set aside the order of the Tribunal. Hence, this appeal. In paragraph 7 of its judgment, the High Court has relied on the B explanation to Section 37 of the Income T~x Act which states : "S.37-Explanation - For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure". C Case: DR. T.A. QUERESHI versus COMMISSIONER OF INCOME TAX, BHOPAL [[2006] SUPP. 10 S.C.R. 311] (2006) 1.atAdr!0OSeNisrfegCeyet0O*?,z10JNS.+J.*J.WHno?, 1985 adHac;2;K->faraoats2Lz;K->He'dNeyਵ*>00OaS;PsHstasmfaniT? 2.atWhe}HatesWantadHac;2;K->0Jfay;P2Lzgueadc2 ਲੱ .KWhe}He'd0OsrelisfaeQAH'A0L0>20Jਵ*>0? 3.atHBAS HS |1986-87 Sey Wat S-272/89-90 fed fadH can “Us fefaeas, fit? 2>ਲ0JMUSISSWYUd0JSuWHS S0Jfay.0ੱ.JmousNeyHeJIAH2Lz*>:OFa =0O।fHBu, J]MNS] |*P0> 7 0OfH0>.20->, 0JCuWHS S;P-0K:>ars '.Ofemitf2LzNos dl37 0O0JMHSra‘nicnio_O'r : "p=).37-feyitf - 2Lz0L0AddBu, frergWATSatsden;PToToaHਵJYduYoofanਵJBCHBuHo'aEecd!rafafoMUU;Pai+t= 4cd!edi;P, 2;JHemdred.0;>;PYooBu0JAaQH0Oatdurgai*OਸOWSot ac at2;Jai-ੱ.>;K->ootror;P=PSUSfeoHaag0OWhe}Oodv"। Misagst0OAorydeal)ਸ?JmH.nro.ਵ0?>2O0ਲJਲ.0ੱ.JfaaN 0J1>0> 37 0JfooHfeooutoYee2;J;P1>0> 37 atdurdyYoon2>ਲ:,z1.;P, NW{ToHfagtafogHTatdurdYoon2>ਲ:,z1.2;J;>।*02>ਲatdurgOAH}HTfo0ਲJਲ2>ਲ:.;?.;>। 2zHa, J]:JਸK0LfogH3He2>ਲ0JHoeAdd!;Pwd}0JMSaHSahNeTWJel2OfAfaWoTH.KSoSWE'VE0>CUTSHodesAddeThayy0>2;J:J:!Kfo=tmnin.ST. ?0>20>:J.JSita, Ho'aEeWhoa{T.ਵਵ>0WSFa =0Ofo.K*.;ਲ>0O+P:ਲO2>ਲ:.;?.2;J:JWYUd.?.J 31.3.1993 ;Pcdeotssਲੱ--> (feg*P0> 7 0Ofo0>JIAH) CJ0JHS'AE:Jਸ>?ਲfg0J.20?>-m3coat0Oafzaiਲ>-Buadda!fH.0ਹ>, WHSddwoecd!rgHemfou;PfaMisagst:Jfogਲੱ!OJe;2SSUES0OSoSNWfo2Lzcu.0;>;PBuUdidddਲ>-। 2zHa, 0JHStae!2O0ਲJਲ.0ੱ.J:JToCJ:J.:0+YSstaec*OਸO.KWHS;JdH.0;>:JNWier)WE'VENWcue0Jaut!P0-: = 4!.J.ਵ1J2;Jdd.0;>:J।JSita, ad =0O 31.3.1993 0OYS]yr Hfg.ੱ/>0JoOfe;PfoHS aS.20?>-fogਲੱ!OJe:2Neycue0Odaefo.0ਹ>faSsSoHwhoaYSMT2Lz;PcdroatsfraoOCJHS aSਲੱ!>femu:JfgBsusaN Soen0Oade2zHa0JWMgG0O0JFa =.?.J 31.3.1993 = LefegFa =cHਵ>*:,Kਲ>farfay:J, *014.10.1998 0OWHWH0O2>ਲfd =2OHon;Pfa>,.atstsesrelisHO'adeHeal:J।fogਵ*>0fe;PTSH tuCJ0JFa =2LzCIste.0?ਸCJ0JHoeatdurgdd.0;>:J.20?>-0ONWSoS0Jfeat foਵ>00JWHSSahwoefjatgaWoe}uਲੱ-->0O.ੱ/, fa0J*>ਲ->Aagt;PStoutਵJox— Pa.KWha}‘adurg;PuatdurgQAO] 0.ੱ/0OJ]oH;2cD"dcdatsTou;P0J0>+P:ਲ>feWHS Sfeg:J.yy.at,2>?AY".:z", i.MI.YW (1980) WH.:J 1271 ra:JuoH0OfaHS'aASਲPa '.OsHacl:0!0?Jm3feWHS SWtf asCJ0JOAH'O*P0>;K.0;>;P0O,>;0>,.0O?K00>OSHਲ>>?J;P;K->eas.0ੱ.JfaeiatdurgOAS| |ad =0>JIdH.?.J 14.10.1998 ;P‘feg.ੱ/0JoO*P0> 8 *?->ਵ2LzCJ0Jrehire+>0?He'd0>.;ੱ:>HS'AE0Oਵ*>0feu]faoO0O?ੱ0O2>0, ad =2O 5 fasglH0OQAaH'S0Jact0OHS'aS0Oume2Lz?2>L0J.0ੱ.J।addue0Jfant "?Kੱਲ0>Ho'aEeatsfop:Jcd!Fa = '.O0K 2 ਲੱ faeiatdurgOAH| WHT*L0J.0ਹ>:.;?.2>ਲ0J.0?ਸfay2>ਲ0JfefaHeoS| GuWHS S, JSita, *P0> 10 feofo0O+P:ਲO2OSaren: "0HoeAdd!;PfogfeoA:Jਲੱ!Ofeo*OਸO0OslacdGHASSis2;J:Jadu;20O2>ਲ*>,z0JਸK0>ਲO - SoSBuaotJue CH0O*OਸO।fefo0> ਲ>;P.ੱ/J];PToAQadSoS0Jfond;PnNsSrUmA0O..;.nos|fHfegਵO K, 0Jfeyitf0Jaddqsi->!2Lz 37 *L0J.0ਹ>:JH3HdNeyfHBu:ਵ>ਲcielohhਵJactBu0J?Kੱਲ0O>,.oatsਲO 2Ooats2;Jਉॱ?->2>;J:JWhtfaHਵJaca0>cMAdd0>JaudfraHS'AE—tGH0JUgtHa*OਸOਵ0!.J.ਵ1J2>ਲHa.,2>Whe)PSEm3!P0-: = 4atdurgfogਸ>?ਲ;K-Buaon<jfe:J।cCdIY, fafraslddoCUSICSLBuHdHO'd:Jfogfrosaddo:Jfegਸ>?ਲurayTouad.0;>;PWhe)?2Kੱ .>0O.ਵ0Kੱ1Jsheupyi"। |:>+Ogu, 0JGuYAS S;PPSPSUSfraSTS AT SNeydtsalUdd:!K2>ਲK‘: ~~ 4UdWHT*L0J.0ਹ>:.;?.2>ਲ0JSuWHAM toHSA!P0-: = 4,z!2>ਲ.20?>-fegfro,;K.;JWOtsaloHdd.0;>:JNWcueSoSJSilal, oH;22Lz;K->cd!+P:ਲ>atsfou;PMHC S: ~~ 4.:1>.> '.O;Pm32;Jfo '.OWTSdftsalfeud]= 4;Pdotsast.Kਵੱ 0>, 0O.L0.OHeal'd'ifSnit,J/?m3WHT SfA,>;0 0O.L0 '.O*.;ਲ>;Jfimfay, 0J.ੱ/0O0JoH;2ਵ0!odAcdoarsਉॱ*0fan;P0J+P:ਲ>0OJ]WHS S|:J.yy.at,2>?AMygt.:z"(:K*0>)। cS feeriimr og 37 J HS fed gy ct adt 6 age Jo Hae HHS 2 9S fe RTTSt Pan uePadys yuu, Ug ¢ adud Sans ADH SAMS JO HOdd J'= WHY euda froਵ>0faUTfaret;Pfodd>,.atst0>!?2Hc'd0>.;ੱ:>Ho'aS0Oਵ*>0feo, fo>,.ny>,.J0>MOHdE|Add;PMh ae0Oਵ*>0feoHcld2LzeUlidwreaH?2>L0J.0ੱ.Jattott;P।ਵ*>0fegHe'd0OQAH'S2LzHomdietort;PtSaH-SaalTHHA,2>?eUlidWT Awim oenfreMATH TSTaSing, Syyyg (1973) p= p= 1032। Bu0Jdidd.0ੱ.>ਉॱ*0, 0Ojuagtes.20-O0JCuMAS2Lzaltf2;JJharlHadI;PpeefHcd"fH2Lz0ੱ0dd.0ੱ.>ran;PnNdQ =0>JAHaltf0.;z0>;P,;>ਲats|MATS0Jfays;P।antoUdv2;J। TfSHASHY He'Sd STHnmUSt STH feuHHBE Sa dl HHS J WS fae fan dd Seu Set PHSHS od ala’ AW Hae:>0Otea deg yeMAS Ord|ATS Set HA 6 Sard fest Wea! nod MUSfeayS.0ੱ.J। Case: DR. T.A. QUERESHI versus COMMISSIONER OF INCOME TAX, BHOPAL [[2006] SUPP. 10 S.C.R. 311] (2006) . COMMNR।आयकर, भोपाल[मार्कंडेयकाटजू, जे.] 325 इसप्रकारहैकिइसतरहकेव्यवसायसेकोईभीनुकसानएकव्यावसायिकनुकसानहै। इसमामलेकेतथ्यइसन्यायालयकेफैसलेसेपूरीतरहसेजुड़ेहुएहैं। सी. आई. टी. वी. प्यारासिंह, ए. आई. आर. (1980) एस. सी. 1271 जोएकनिर्धारितीकामामलाथा।तस्करीगतिविधिकोआगेबढ़ातेहुएऔरइसन्यायालयनेमानाकिइससेहोनेवालानुकसान मुद्रानोटोंकोजब्तकरनेकीअनुमतिव्यावसायिकनुकसानकेरूपमेंदीजानीचाहिए। न्यायाधिकरणकेदिनांक14.10.1998 केआदेशमेंतथ्यकानिष्कर्षहै पैराग्राफ8 मेंइसप्रभावकेलिएकिहेरोइननिर्धारितीकेव्यापारमेंस्टॉककाहिस्साहै।इसनिष्कर्षकोध्यानमेंरखतेहुए, न्यायाधिकरणने5 किलोग्रामकेनुकसानकीकटौतीकरनेकेनिर्धारितीकेदावेकीअनुमतिदी।हेरोइनकीकीमतजिसकामूल्यन्यायाधिकरणद्वारारु।2 व्यावसायिकहानिकेरूपमेंलाख। हमन्यायाधिकरणद्वारालिएगएदृष्टिकोणसेपूरीतरहसहमतहैं। हालाँकि, उच्चन्यायालयनेअपनेफैसलेकेपैराग्राफ10 मेंकहाः इसमामलेमेंनिर्धारितीडॉक्टरकेपेशेमेंलगाहुआथा।वह. " --प्रतिबंधितवस्तुसेकोईलेनादेनानहींथाहेरोइनलेजानेकेलिए उसकापेशा।यहएकस्वीकृततथ्यहैकिहेरोइनकाकब्ज़ाएक निर्धारितीऐसीकिसीभीकटौतीकादावाकरनेकाहकदारहैजोइसमेंबाध्यथाइसतरहकेजघन्यऔरअवैधव्यवसायमेंलिप्तहोनाजिसकाउससेकोईसंबंधनहींहै पवित्रव्यावसायिकगतिविधि।वास्तवमें, यहएकडॉक्टरकेलिएशर्मकीबातथी समुदायजहाँएकडॉक्टरकोइसतरहकेकाममेंलिप्तपायागयाथा मानवताकेखिलाफगतिविधियोंका"। हमारीरायमें, उच्चन्यायालयनेएकभावनात्मकऔरनैतिकदृष्टिकोणअपनायाहै कानूनीदृष्टिकोणकेबजाय।हमउच्चन्यायालयसेपूरीतरहसहमतहैंकिनिर्धारितीअवैधरूपसेएकअत्यधिकअनैतिककार्यकररहाथा। हेरोइनकानिर्माणऔरबिक्री।हालाँकि, मामलोंकानिर्णयन्यायालयद्वाराकानूनीसिद्धांतोंपरकियाजानाहैनकिअपनेस्वयंकेनैतिकविचारोंपर।कानूननैतिकतासेअलगहै, जैसाकिसकारात्मकन्यायविदोंबेंथमऔरऑस्टिननेबताया। जैसाकिपहलेहीऊपरदेखाजाचुकाहै, मामलेकेतथ्योंकोपूरीतरहसेशामिलकियागयाहै सी. आई. टी. बनाममेंइसन्यायालयकेनिर्णयद्वारा।प्यारासिंह(ऊपर)। धारा37 केस्पष्टीकरणकावास्तवमेंवर्तमानसेकोईलेना-देनानहींहै। मामलायहहैकियहव्यावसायिकव्कानहीं, बल्किव्यावसायिकनुकसानकामामलाहै।लाभकीगणनामेंसामान्यवाणिज्यिकसिद्धांतोंपरव्यावसायिकनुकसानस्वीकार्यहैं। सर्वोच्चन्यायालयकीरिपोर्ट[2006] एस. यू. पी. किजब्तकीगईहेरोइनस्टॉककाहिस्साथी इसप्रकारकीजब्तीऔरजब्ती एकव्यावसायिकनुकसानकेरूपमेंलुढ़का।व्यापारमेंस्टॉककानुकसानएच आयआयुक्तकेमाध्यमसेभारीनुकसान-करबनाम।एस. आई. ए. आर., ए. आई. आर. (1973) एस. सी. 1032। ऊपरदिएगएपुत्र, सर्वोच्चकाविवादितनिर्णयऔरइसेइसकेद्वाराअलगरखागयाहैऔरइसकाआदेश अपीलकीअनुमतिहै।कोईलागतनहीं। अपीलकरें Case: DR. T.A. QUERESHI versus COMMISSIONER OF INCOME TAX, BHOPAL [[2006] SUPP. 10 S.C.R. 311] (2006) In paragraph 7 of its judgment, the High Court has relied on the B explanation to Section 37 of the Income T~x Act which states : "S.37-Explanation - For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure". C Learned senior counsel for the appellant Mr. M. L.Verma, contended that Section 37 of the Act has no application in this case since Section 37 relates to business expenditure, and in this case we are not concerned with business expenditure but with business loss. We agree with this contention. D No doubt, it was initially contented by the assessee before the Income Tax authorities that the apparatus for manufacturing heroin from opium did not belong to the assessee but belonged to one V. T. Madan. However, the Assessing Officer did not agree with this contention and the Tribunal in its earlier order dated 3 l.3.1993 has recorded a finding (in paragraph 7 of its E order) that the assessee was involved in the manufacture and selling of heroin for material gain. Thus, it has been held by the Income Tax authorities that the appellant was engaged in manufacture of heroin and selling it for material gain. F F No doubt, the assessee had contended that he was only earning income from his medical profession and was not doing any illegal activity of manufacturing and selling of heroin. However, the finding of fact of the Tribunal in its order dated 3 l.3.1993 is that the assessee was engaged in manufacture and selling of heroin. Thus the Income Tax authorities themselves have recorded a finding that the assessee was engaged in manufacture and G selling of heroin. No doubt the order of the Tribunal dated 31.3.1993 was subsequently recalled by the Tribunal, but since with ultimate order dated 14.10.1998 the Tribunal has held that the hero.in seized was the assessee's stock in trade it is implicit that the Tribunal reiterated to view that the assessee was doing the business of manufacture and sale of heroin. H Once the Income Tax authorities records such a finding of fact, it - -- A follows that any loss from such a business is a business loss. The facts of this case are squarely covered by the decision of this Court in CIT v. Piara Singh, AIR (1980) SC 1271 which was a case of an assessee carrying on smuggling activity and this Court held that the loss arising out of confiscation of currency notes must be allowed as a business loss. B In the order of the Tribunal dated 14.10.1998 there is a finding of fact in paragraph 8 to the effect that the heroin forms part of the stock in trade of the assessee. In view of this finding, the Tribunal allowed the assessee's claim of deducting the loss of 5 kg. of heroin whose ".alue was assessed by the Tribunal at Rs. 2 lacs as a business loss. c We .fully agree with the view taken by the Tribunal. The High Court, however, in paragraph 10 of its judgment observed: "The assessee in this case was engaged in profession of doctor. He had nothing to do with the contraband article-Heroin for carrying on D his profession. It is an admitted fact that possession of Heroin is an offence under NDPS Act. In this view, the rigour of explanation to Section 37 was fully satisfied and hence the question claiming any deduction for the value of seized article did not arise nor was an assessee entitled to claim any such deduction who was bound in E indulging in such heinous and illegal business unconnected with his pious professional activity. Indeed, it was disgrace for a doctor community where one doctor was found indulging in doing such kind of activities against the humanity". Case: DR. T.A. QUERESHI versus COMMISSIONER OF INCOME TAX, BHOPAL [[2006] SUPP. 10 S.C.R. 311] (2006) In our opinion, the High Court has adopted an emotional and moral F approach rather than a legal approach. We fully agree with the High Court that the assessee was committing a highly immoral act in illegally manufacturing and selling heroin. However, cases are to be decided by Court on legal principles and not on one's own moral views. Law is different from morality, as the positivist jurists Bentham and Austin pointed out. G As already observed above, the facts of the case are squarely covered by the decision of this Court in CIT v. Piara Singh (supra). The explanation to Section 37 has really nothing to do with the present case as it is not a case of a business expenditure, but of business loss. Business losses are allowable on ordinary commercial principles in computing profits. H SUPREME COURT REPORTS [2006] SUPP. JO S.C.R. A Once it is found that the heroin seized formed part of the stock in trade of the assessee, it follows that the seizure and confiscation of such stock in trade has to be allowed as a business loss. Loss of stock in trade has to be considered as a trading loss vide Commissioner of Income-Tax v. S.N.A.S.A. Annamalai Chettiar, AIR (1973) SC 1032. B For the reasons given above, the impugned judgment of the High Court cannot be sustained and it is hereby set aside and the order of the Tribunal stands restored. The appeal is allowed. No costs. N.J. ., Appeal allowed.