TaxTMI 
TaxTMI 
2002 (11) TMI 78
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.... claimed bad debt in respect of an amount of Rs. 5,87,531.01 due from Podar Mills Ltd. (Bombay). The assessee also claimed bad debt in respect of the amount of Rs. 6,25,704.14 due from Podar Spinning Mills (Jaipur). Podar Spinning Mills (Jaipur) and Podar Mills Ltd. (Bombay) were taken over by the Central Government vide Notification dated October 18, 1983, issued under section 4(3) of the Textiles Undertakings (Taking Over of Management) Ordinance, 1983. In the circumstances, the assessee contended before the Assessing Officer that it was impossible to recover the debts from Podar Mills Ltd. (Bombay) and Podar Spinning Mills (Jaipur). The assessee further pointed out that even the financial position of the acquiring body, viz., National T....
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....contended that under the Ordinance, recovery by way of receiver/liquidation was ruled out because permission was required to be taken from the Central Government before such recovery could be made. He further contended that although filing of the suit was not barred under the Ordinance, a prudent businessman was entitled to take the view after reading the Ordinance not to put good money for recovery of bad money. He further submitted that the accounts of the mills in the books of the assessee for the earlier year ending Diwali 1983, year ending Diwali 1984, year ending Diwali 1985, and year ending Diwali 1986, clearly showed that no amount was received from the said two mills during the assessment years 1985-86, 1986-87, 1987-88 and, theref....
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..... However, in this case, we are concerned with the law applicable prior to April 1, 1989, under which the assessee was required to establish not only that the amount had become a bad debt but also that it had become irrecoverable in the year in which it is written off. He contended that under the Ordinance, it was open to the assessee to seek permission from the Central Government to recover the amount by way of liquidation/receiver. That, no such petition was made to the Government seeking permission to recover the amount vide liquidation/receiver. He relied upon the judgment of the Calcutta High Court in the case of Rallis India Ltd. v. CIT [2000] 246 ITR 170 in support of his contention. He accordingly submitted that no case for interfer....
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....of raw material to the two mills during the pre-take over period. Lastly, one has to look at the Ordinance from the businessman's point of view. Looking to the object of the Ordinance and particularly in view of section 8(1)(c) of the Ordinance, it is clear that so long as the management of the textile undertaking remained vested in the Central Government, there was no scope for recovery of the amount because under section 8(1)(c), it has been stipulated that no proceedings for winding up or for the appointment of a liquidator or for the appointment of a receiver could lie except with the consent of the Central Government. As stated above, various representations were made to the Central Government. The Central Government categorically reje....
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.... of the undertakings of the textile mills with a view to improve the working conditions and that the take over of the management included the assets, rights and leaseholds along with the privileges. That, under section 7 of the Ordinance, any liability incurred by the textile company pre-take-over was enforceable against the concerned textile company and not against the Central Government or the custodian. In view of section 7 of the Ordinance, the Calcutta High Court came to the conclusion that the assessee, Rallis India Ltd., could have proceeded against the Tata Mills (textile company) for recovering the amounts due to it and if the amounts, despite such proceedings, could not have been recovered, the assessee had an option to apply to t....