State with brief reasons whether the following losses sustained during the year while carrying a business be allowable while computing the income under the head "Profits and gains of business or profession": Embezzlement

Losses / Bad debts which are directly incidental to the business or profession of the assessee are allowable as per provisions contained under section 36/37 of the Income Tax Act 1961. Further as per the provision of section 37 of the Income Tax Act, Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". Accordingly allowability of the given losses is as under: Embezzlement of cash by the cashier: The loss of money due to embezzlement by an employee handling the fund of the business while discharging his official duties is allowed as deduction considering it incidental to business loss while computing the income under the head "Profit and Gains from Business and Profession.