| 6/1/2009 |
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| Board of Special Commissioners - Cases |
| Case No. 8/56 |
Decided: 23 November, 1956 |
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Monies fraudulently appropriated by an employee, whatever his grade, (as against a partner) constitute a deductible expense - article 10(1), Income Tax Act
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Although the Board treated and decided upon the appeal on other considerations, in its deliberations it made its observations on whether monies appropriated by an employee constituted a deductible expense.
In his decision the Commissioner had made reference to the English case Curtis vs Oldsfield wherein it was established that a debt entered into by the Managing Director who had appropriated himself of the company's monies for personal purposes, could not be treated as a deductible bad debt. The Board observed that the position of a Managing Director, who was a shareholder, was different from that of an employee. Indeed the Judge, when delivering his judgement in the same case, had drawn such distinction in stating that: "I quite think that if you have a business, in the course of which you have to employ subordinates, and owing to the negligence or dishonesty of the subordinates some of the receipts of the business do not find their way into the till, or some of the bills are not collected at all, or something of that sort, that may be an expense connected with and arising out of the trade in the most complete sense of the word."
This decision was appealed in front of the Court (Case No. 16).
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