Bad-debt deduction findings stand where Tribunal's view on irrecoverability is supported by evidence and not perverse.
In a tax reference on bad-debt deductions, the Bombay HC held that interference with the Tribunal's finding was warranted only if the view was perverse, unsupported by evidence, or one no reasonable person could reach. Applying that standard, the Court found no legal error in disallowing the first bad-debt claim, as the assessee failed to show perversity or absence of evidence. It also upheld disallowance of the second claim because the record showed the debtor-company had no meaningful assets and the alleged revival efforts were vague, allowing the Tribunal to conclude the debt had become irrecoverable before the relevant assessment year. Costs were awarded against the assessee.
Issues: (i) Whether the Tribunal erred in law or acted without evidence in disallowing the item of Rs. 4,996 as a bad debt. (ii) Whether the Tribunal erred in law or acted without evidence in disallowing the sum of Rs. 62,078 as a bad debt on the footing that it had become irrecoverable prior to the relevant assessment year.
Issue (i): Whether the Tribunal erred in law or acted without evidence in disallowing the item of Rs. 4,996 as a bad debt.
Analysis: The reference was confined to whether the Tribunal's view could be assailed in law. The material disclosed that the loss on account of devaluation had already been concluded by earlier decisions of the same court and the assessee could not show any legal error, absence of evidence, or perversity in the Tribunal's approach.
Conclusion: The issue was answered against the assessee.
Issue (ii): Whether the Tribunal erred in law or acted without evidence in disallowing the sum of Rs. 62,078 as a bad debt on the footing that it had become irrecoverable prior to the relevant assessment year.
Analysis: The court held that, in a reference, it was not concerned with whether another view was possible but only whether the Tribunal's view was perverse or unsupported by evidence. On the record, there were no assets left in the debtor-company apart from municipal bonds of limited value, and the alleged attempts to revive business were vague and insubstantial. On that material, the Tribunal could reasonably conclude that the debt had become bad before the assessment year.
Conclusion: The issue was answered against the assessee.
Final Conclusion: The reference was disposed of by sustaining the Tribunal's rejection of both bad-debt claims and by awarding costs against the assessee.
Ratio Decidendi: In a tax reference, the court will not interfere with the Tribunal's finding on irrecoverability unless the finding is perverse, unsupported by evidence, or one that no reasonable person could reach on the material on record.