TaxTMI 
TaxTMI 
2022 (5) TMI 54
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....llant / assessee has come up with this tax case appeal, raising the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in rejecting the claim of bad debt/trading loss of the amount advanced by the assessee in the course of its money-lending activity? 2. Whether the Tribunal was justified in law in confirming the disallowance of bad debt without adverting to the material placed on record as to the inability of the debtor to pay the interest and the principal amount? 3. Whether the Tribunal is justified in law in confirming the disallowance even while its conclusion is not backed by any reasoning as to the rejection of the bad debt/....
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....ritten off in the books in terms of Section 36(1)(vii) and accordingly, passed the assessment order on 20.12.1999 under section 158BC r/w section 143(3) of the Income Tax Act. 3. On appeal, the appellant / assessee raised a fresh plea that the bad debts may be alternatively treated as trading loss. The Commissioner of Income Tax (Appeals) remanded the matter back to the assessing officer to examine the alternate plea. On remand, the assessing officer, while accepting the claim of trading loss with regard to the advance to four persons amounting to Rs.13.5 lakhs, rejected the claim of the assessee relating to one Mani for an advance of Rs.12.5 lakhs and accordingly, passed the fresh assessment order under section 143(3) r/w section 251 on....
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....nd shaky and that it would be impossible to collect any money from him. The question is really one of fact depending upon the various facts and diverse circumstances bearing on the debtor's pecuniary position, his commitments and obligations. The Judgment of the assessee in regarding the debt as a bad debt must be an honest judgment. The judgment of the assessee must be established to have been taken on relevant facts and circumstances, which should show that the debt is not realizable for some fault on the part of the debtor or some supervening impossibility on the part of the debtor to pay but not possible difficulties or hurdles the assessee may have to incur to compel the recalcitrant debtor to pay. The assessee for his convenience ....
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....llant was not honest nor objective, keeping in view the relevant factors. Therefore, the Tribunal rejected the plea of the assessee and confirmed the order of the Commissioner of Income Tax (Appeals). 8. Be it noted, whether a debt turned bad is a question of fact, which would clear from the Judgment of the Supreme Court in Travancore Tea Estates Co. Ltd. v. CIT, (1998) 8 SCC 667 at page 667, wherein it is held as follows: "It is well settled that whether a debt has become bad or the point of time when it became bad are pure questions of fact." 9. In this context, it is relevant to point out the observation of the supreme court in the case of Bank of Bihar Ltd. v. CIT, [(1962) 45 ITR 427] which reads as under: "6.The....