TMI Blog1962 (3) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it did not cease to be bad. Appeal dismissed. - - - - - Dated:- 27-3-1962 - Judge(s) : M. HIDAYATULLAH., J. C. SHAH JUDGMENT The judgment of the court was delivered by SHAH J.---In the proceedings for assessment of income-tax for the year 1950-51, the assessees, who are a public limited company carrying on the business of banking, claimed that an amount of Rs. 4,22,582 due in the account of Messrs. Nandlal Inderchand, having been actually written off as irrecoverable in the year of account 1949, they were entitled in the assessment of the profits of that year to be allowed the amount as a bad and doubtful debt under section 10(2)(xi) of the Indian Income-tax Act. The amount of Rs. 4,22,582 consisted of three items as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . and Messrs. Fulchand Srinarain had become irrecoverable in the year of account 1947 and could not be allowed as bad or doubtful debts in the assessment of profits for the year of account 1949. The finding of the Appellate Assistant Commissioner about the amount due from Messrs. Nandlal Inderchand was not challenged before the Tribunal and, in this appeal, we are not concerned with the disallowance of that amount. The Tribunal declined to refer to the High Court under section 66(1) of the Income-tax Act a statement of the case about the amounts due in the two accounts of B. I.G. Co. and Fulchand Srinarain, but the High Court, by order dated July 31, 1957, directed the Tribunal to state a case under section 66(2) on the following questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the year of account 1949. Mr. Viswanatha Sastri for the assessees contends that it was open to the assessees to amalgamate the three accounts of the same debtor and if the debtor was in a position to pay and did pay some amounts towards the consolidated account, it could not be said that because nothing was recovered in the years prior to amalgamation the debts must be deemed to have become bad in those previous years. But there is no evidence to show that Messrs. Nandlal Inderchand were the exclusive owners of the business carried on in the names of B. I. G. Co. and Fulchand Srinarain. The finding of the income-tax authorities was that they were interested in those businesses. Again, apart from the pledge of shares of a small value, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se it is a question of fact, to be determined after consideration of all relevant circumstances. It is true that at the material time when this case was decided, the Act contained no provision such as section 10(2)(xi) authorising deductions of bad debts of business, but it was held that such a deduction was necessarily allowable ; to refuse to do so would result in a statement of profits and gains of the year which was not true. In this case before the Tribunal there was evidence on which it could hold that the debt had become bad in the year 1947. If the debt had become had in the year 1947, by its mere subsequent amalgamation unilaterally made by the creditor with a debt which was recoverable, it did not cease to be bad. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
