Bad debt deduction upheld where factual findings showed an irrecoverable loan from money-lending business

A deduction claimed as a bad debt was upheld where the Tribunal found that the assessee had succeeded to a money-lending business and that the sum represented an irrecoverable loan arising in that business. The High Court treated those conclusions as findings of fact based on evidence, and the appellate court saw no basis to interfere with them in further appeal. On that footing, the amount was accepted as a bad debt and the department's challenge failed.

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Issues: Whether the sum of Rs. 10,55,025 due from the debtor was allowable as a bad debt under section 10(2)(xi) of the Income-tax Act, 1922.

Analysis: The Tribunal had allowed the deduction on the footing that the assessee had succeeded to a money-lending business and that the amount represented an irrecoverable loan arising in that business. The High Court treated the Tribunal's conclusions as findings of fact based on evidence. The appellate court held that such findings did not call for interference, and that no basis existed to disturb them in further appeal.

Conclusion: The claim as a bad debt stood accepted on the factual findings, and the department's challenge failed.

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