1990 (1) TMI 10 - HC - Income Tax

High Court of Kerala declines to address deduction issues due to missing documents for assessment year 1977-78.

Commissioner Of Income-Tax Versus Travancore Tea Estate Co. Limited

The High Court of Kerala declined to answer the issues regarding the deduction of bad debt, business loss, and revenue loss claimed by the assessee for ... Business Loss Issues:1. Allowability of deduction for bad debt written off by the assessee.2. Admissibility of deduction for business loss claimed by the assessee.3. Allowability of deduction for revenue loss in respect of the sale of current assets claimed by the assessee.Analysis:The High Court of Kerala addressed the issues arising from the common appellate order of the Income-tax Appellate Tribunal regarding the assessment year 1977-78. The first issue involved the deduction of Rs. 40,81,140 claimed by the assessee as a bad debt written off. The second issue pertained to the deduction of the same amount as a business loss. The third issue was related to the deduction of Rs. 11,36,779 claimed by the assessee as a revenue loss in connection with the sale of current assets.In the case, the assessee, a non-resident company engaged in tea plantation and tea manufacturing, had entered into agreements for the sale of its estate and tea production. Disputes arose with a buyer, leading to a significant amount becoming due to the assessee. The Reserve Bank of India initially denied permission for the estate sale but later granted it. Subsequently, the assessee sold its estate and assets to another company, writing off the due amount as a bad debt a day before the sale.The Income-tax Officer rejected the claim of bad debt or business loss, but the Commissioner of Income-tax (Appeals) allowed a deduction of Rs. 11,36,779 as a business loss. Both the assessee and the Revenue appealed to the Appellate Tribunal, which upheld the decision of the Commissioner. The Tribunal considered the amount as a loss on the sale of current assets, leading to the references to the High Court.During the proceedings, the assessee requested the inclusion of additional documents crucial for the case, but the Appellate Tribunal declined, stating that the documents were not necessary for the reference applications' disposal. The High Court emphasized the importance of including essential documents for a detailed consideration of the case and declined to answer the questions due to the lack of vital documents in the statement of the case.The High Court highlighted the duty of the Appellate Tribunal to provide a detailed statement of facts and essential documents to enable a proper consideration of the questions referred. Citing previous decisions, the Court emphasized the necessity of including all vital documents relied upon in the decision. As the Tribunal failed to include crucial documents, the High Court declined to answer the questions and advised the Tribunal to provide a proper statement of the case with all essential materials if inclined.In conclusion, the High Court disposed of the reference without answering the questions due to the absence of vital documents and directed the Tribunal to submit a comprehensive statement of the case with all essential documents for further consideration.