Bad debt deduction denied where advances were not linked to money-lending business or any other business activity.

A debt written off was held not deductible where the Tribunal's supplementary findings of fact showed that the amounts sent to the Bombay firm were neither loans made in the ordinary course of the assessee's money-lending business nor referable to any other business of the assessee. Those factual findings were supported by the evidence, and because the entire claim was covered by that conclusion, no part of the debt could be allocated as deductible on the facts found. The deduction under section 10(2)(xi) of the Indian Income-tax Act, 1922 was therefore disallowed, and the answer to the reframed question was against the assessee.

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Issues: Whether the sum of Rs. 2,68,385 written off by the assessee was deductible as a bad debt under section 10(2)(xi) of the Indian Income-tax Act, 1922, on the footing that it represented loans made in the ordinary course of the assessee's money-lending business or was otherwise referable to the assessee's business.

Analysis: The Tribunal's supplementary findings were treated as findings of fact and were held to be supported by the evidence on record. On those findings, the moneys sent to the Bombay firm were not loans made in the ordinary course of the assessee's money-lending business and were not in respect of any other business of the assessee. Since the entire amount claimed stood covered by that factual finding, no allocation of any part of the debt was permissible on the facts found.

Conclusion: The deduction was not allowable and the answer to the reframed question was in the negative, against the assessee and in favour of the Revenue.

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