TaxTMI 
TaxTMI 
1963 (3) TMI 52
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....ehrani on 31st January, 1956, and agreed to provide him with further funds to the extent of Rs. 1,50,000. In all, the assessee advanced to Tehrani the sum of Rs. 5,57,022-10-1 in pursuance of the two agreements aforesaid. The picture, after release, proved to be a flop and the expectations of the assessee to make profit out of the financing agreements failed. The assessee was, however, able to realise by collections from exhibitions and by sale of distribution rights, in all a sum of Rs. 4,91,071-12-3. There remained a balance of Rs. 65,950-13-10 due and payable by Tehrani to the assessee. It appears that this Tehrani was not a person of large means. He had a house in the city of Madras, purchased in the name of his wife. He held 100 shares in Newtone Studios Ltd., of the face value of Rs. 10,000. Notwithstanding the indebtedness of Tehrani to the assessee and possibly to several others, his resourcefulness and enthusiasm to produce pictures did not come to an end. The assessee entered into an arrangement with Tehrani on 1st April, 1957, by which Tehrani pledged his shares in Newtone Studios as security for a sum of Rs. 10,000, on condition of the assessee waiving the balance of Rs....
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....tacamund and that though the house in Madras stood in the name of the debtor's wife, the debtor himself had treated the income from the house as his own income in submitting his income-tax returns. The Tribunal took into account the fact that, even as late as 1961, the debtor's account was credited by the assessee with the sum of Rs. 5,000 and odd, being the sale proceeds of an impression of the film Raja Rani. The Tribunal, therefore, affirmed the view taken by the department and held that the claim of the assessee to write off could not be sustained in law. The assessee's applications under section 66(1) of the Act for reference of questions of law to this court failed before the Tribunal and hence these applications have been preferred. The question sought to be referred is this : " Whether, on the facts and in the circumstances of the case, the sum of Rs. 55,951 is allowable as a deduction from its profits under sections 10(2)(xi) or section 10(2)(xv) of the Act. " Learned counsel for the assessee did not very properly submit that the deduction would fall under section 10(2)(xv). The only short question which arises for consideration is whether the assessee....
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....ebtor's pecuniary position, his commitments and obligations, and the natural apprehensions that would be caused in the minds of the creditors regarding recovery of their dues. While the onus of establishing that the write off of the alleged bad debt is proper and permissible in the circumstances of the case is undoubtedly upon the assessee, the department cannot insist on demonstrative proof which is quite infallible. What then is the present position and what are the facts proved or admitted ? The debtor is still active in the pursuit of his business, profession or vocation. The assessee himself did not treat the debtor as one financially broken as even during the year 1957, six months after writing off of the present debt, he thought him creditworthy for being lent a further sum of Rs. 25,000. Admittedly, the debtor owns immovable properties both in Madras and in Ootacamund. He is holding shares in a film producing concern. To the outside world the debtor is certainly not a person without credit verging on insolvency. His indebtedness to others under decrees of court is only one side of the picture. It is impossible to assume that the assessee, in these circumstances, coul....
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....e Madras Agriculturists Relief Act. On that basis the debtor would be entitled to proportionate reduction of the principal in proportion to the period during which the mortgagee-assessee had already been in possession. The creditor and the debtor sat together and worked out their respective rights and obligations in accordance with the terms of that Act. The deficiency of the sum of Rs. 6,125 that was caused in the matter of realisation of the debt was certainly not the direct result of the agreement between the parties, but was only because of the operation of the statute. We do not think that the learned judges meant to lay down as a proposition of law that wherever and whenever a creditor chooses to receive from the debtor not the full amount of the debt, but only a portion thereof, the portion waived and not realised should be available to the creditor as being treated as a bad and doubtful debt. It would always be open to a creditor to show concessions to the debtor, due to various reasons and one cannot say that a creditor would not give up any portion of the recoverable dues unless the debtor was not in a position to pay. There are cases in which, having regard to the mutual....