Bad debt deduction upheld where failed film-production advances were written off after unrecovered disputes and supported factual findings.

Advances made for film production were written off after the projects failed, disputes remained unresolved for years, and recovery efforts did not succeed. The Tribunal held that the amount had become bad during the relevant previous year and was allowable as a bad debt or loss. The High Court treated the timing of a debt becoming bad as a question of fact and declined to interfere because the finding was supported by the record and had not been shown to be perverse. The deduction was therefore upheld in favour of the assessee.

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Issues: Whether the assessee was entitled to deduction of the amount written off as a bad debt or loss for the relevant assessment year, and whether the debt had become bad and doubtful during the relevant previous year.

Analysis: The claim arose out of advances made for production of films which were never produced, followed by disputes and litigation between the parties. The Tribunal found that the assessee had written off the amount in its books after the dispute had remained unresolved for several years and after attempts to recover the amount had failed. The question whether a debt has become bad at a particular point of time is one of fact, and a reference court does not reappreciate evidence unless the finding is shown to be perverse. The Tribunal's finding was not challenged as perverse and was supported by the record.

Conclusion: The assessee was entitled to deduction of the amount as a bad debt or loss, and the finding that the debt became bad during the relevant previous year was upheld in favour of the assessee.

Ratio Decidendi: Whether a debt has become bad is essentially a question of fact, and a High Court in reference jurisdiction will not interfere with a supported finding unless it is shown to be perverse.

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