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of <h1>High Court rejects reference from ITAT on bad debt claim & collusive agreement. Factual determination not legal question.</h1> The High Court of Madhya Pradesh declined to call for a reference from the Income-tax Appellate Tribunal regarding the allowance of a bad debt claim and ... 'Whether, Tribunal was justified in allowing the claim of bad debt amounting to Rs. 44,38,276? - Whether, Tribunal was justified in holding that there was no collusive agreement between the assessee-firm and the debtor company?' - 'It is obvious from the facts narrated above that the transaction was not in the nature of investment. The agreement itself mentions that the debtor company had taken a loan from the assessee.' It is further noted by the Tribunal that the interest accrued out of the said loan was added in the previous year as part of the income of the assessee. It is, thus, seen that the aforesaid finding of the Tribunal is purely a finding of fact as to the admissibility of the claim of bad debt, No question of law, therefore, arises in the matter requiring determination by this court. The High Court of Madhya Pradesh declined to call for a reference from the Income-tax Appellate Tribunal regarding the allowance of a bad debt claim and the existence of a collusive agreement between an assessee-firm and a debtor company. The Tribunal's finding that the transaction was a debt that became irrecoverable was considered a factual determination, not requiring a legal question for the court to decide. The application was dismissed.
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