TaxTMI 
TaxTMI 
1957 (2) TMI 67
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.... The Commissioner of Income-tax accepts the case. 2. The question of law on which the Tribunal has been required to state the case is as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in disallowing the said sum of Rs. 70,000 (Rupees seventy thousand) which was claimed as a bad or doubtful debt or as an irrecoverable loan." We shall, therefore, confine ourselves to the facts relevant to the question set out above. 3. The assessee, Karamsey Govindji, is an individual. He carries on the business of speculation and money-lending. He also receives income from property and dividends. 4. For S.Y. 2002, relevant for the assessment year 1947-48, the assessee returned a loss of R....
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....ed had not really become bad during the accounting period which ended on 12th November, 1947. It is further seen that the assessee has advanced a further sum of Rs. 50,000 to Gangaram Nathaji in the subsequent year, i.e., S.Y. 2004. It is not understood on what security such huge amounts were advanced to the debtor. It is stated that the debtor was producing certain pictures in the name of Balwant Films. The assessee appears to have claimed the bad debt during the accounting period to reduce the tax liability, as there is a big profit in speculation. Since the debt did not become bad in the accounting period, I disallow the same." A copy of the Income-tax Officer's order dated 24th March, 1953, is annexure 'A' and forms part ....
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....the debtor to the effect that the repayment of the loan was demanded in September, 1947. It appears from the Appellate Assistant Commissioner's order that a letter was produced before him to show that the picture Ajka Farhad, which the debtor had produced, was offered to be purchased for Rs. 60,000 in September, 1947. The letter is not on the file of the Appellate Assistant Commissioner. 8. The assessee then appealed to the Appellate Tribunal. It appears from the facts as placed before the Tribunal that the adjudication order was passed on 20th July, 1948, and a creditor's petition for adjudging him insolvent was presented in March, 1948, or thereabout. It was also brought to the notice of the Tribunal that an order adjudging B.A....
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....of the language used in section 10(2)(xi) of the Act. The only question which the Tribunal had to determine was: whether the loan which the assessee had advanced to the debtor had become irrecoverable in S.Y. 2003, and the Tribunal's finding is that there was no sufficient material to hold that the "debt" had become irrecoverable in the year of account. The question of law that would, therefore, arise is: "Whether there was evidence on the record for the finding of the Tribunal that the loan had not become irrecoverable in S.Y. 2003?" 11. As directed by their Lordships, we refer the question set out in paragraph 2 above. Y. P. Pandit with S. P. Mehta, for the assessee. G. N. Joshi with Advocate-General, for the Commiss....
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....t was ready a short time before this loan was written off. It is difficult to take the view that, while the debtor had such a valuable asset with him which had not yet been exploited it could be said by the assessee that the loan advanced by him to the debtor had become irrecoverable. It is pointed out by the Appellate Assistant Commissioner that the assessee advanced these large amounts without any security because he expected to be repaid out of the exploitation of this film ; and what the assessee does is to write off this loan before the debtor had even had a chance to exploit the film. It may be, as has turned out subsequently, that the film was never released ; but at the relevant date the assessee could not have knowledge that this f....
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....ion 10(2)(xi) it is open to the Income-tax Officer to say that no part of the bad debt claimed by the assessee had become irrecoverable in the year of account, or he may say that part of it had become irrecoverable. In this case it is clear from his order that he takes the view that no part of this Rs. 70,000 had become irrecoverable. As the only question before us is whether there is evidence to support the finding of the Tribunal, it is difficult to accede to Mr. Pandit's contention that the finding is without any evidence. There is no doubt that in fact Rs. 70,000 were never recovered by the assessee from his debtor. As we had occasion to point out before, the present income-tax law with regard to bad debts makes the position of t....