TaxTMI 
TaxTMI 
1948 (8) TMI 27
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....cts have to be stated: The assessee is the a manager of a Hindu undivided family. He carried on a money-lending business in partnership with one Kasi Aiyar. The business of this partnership was stopped in 1931, but the firm was not dissolved and continued to realised the outstandings due to it. A separate set of books was being maintained in respect of the realisations of outgoings of the firm. One of its outstanding debts was that due from one Kidar Pillai Maracair on a mortgage. There were some collections towards this debt, and finally a decree was obtained by the firm against the debtor sometime in 1940. In execution of the decree, certain lands of the debtor were sold. On 11th September, 1942, a sum of ₹ 16,395-14-10 was still du....
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....late Assistant Commissioner allowed the assessee's claim on the ground that the debt had been taken over by the assessee as part of his money-lending business and the loss was sustained in the separate business carried on by him. On appeal, the Appellate Tribunal confirmed the decision of the Appellate Assistant Commissioner. Thereupon, the Commissioner made an application under Section 66 (1) for a reference to this Court, and the Tribunal has referred the following two questions for our decision :- "(1) Whether there is any material for the Tribunal's finding that the bad debt of ₹ 5,880 claimed by the assessee, arose in respect of a loan made in the ordinary course of his money-lending business, within the meaning of....
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.... No direct authority was cited in support of this contention. Two decisions of the Calcutta High Court which were cited to us, Bissendoyal Doyaram, In re [1938] 6 I.T.R. 165, and Chimanlal Rameswarlal v. Commissioner of Income-tax, Bengal [1940] 8 I.T.R. 408, were long before the enactment of Section 10(2)(xi) of the Income-tax Act. It is, therefore, unnecessary to consider whether the propositions laid down in the two decisions are sound. On the other hand, there is a decision of the Bench of this Court in Commissioner of Income-tax, Madras v. Venkatasubbiah Chetty [1946] 14 I.T.R. 227, the ratio decidendi of which, we think, applies to the present case. In that case, the assessee was the manager of a Hindu joint family carrying on a money....
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....able were not the original promissory notes, but they were promissory notes which had been renewed by the borrowers in favour of the assessee." Having regard to the fact that the Income-tax authorities had since the dissolution regarded those loans as part of the family's business and taxed the family on the interest paid in respect of them, the learned Chief Justice expressed his surprise that the department should contend that clause (xi) did not apply. Though it is true that there were in that case certain facts the like of which are not to be found in the present case, we consider that the principle underlying the decision in that case applies equally to this case. Though in that case fresh promissory notes were executed by th....