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1966 (9) TMI 46 - SC - Income Tax
Whether on a true interpretation of section 10(1), section 10(2)(xi) and section 10(2) (XV) of the Indian Income-tax Act, the claims for the losses of ₹ 48,891 and ₹ 1,21,760 were permissible in the assessment years 1953-54 and 1954-55 respectively?
Held that:- The settlements with the constituents and the consequent posting of entries in the books of account cannot be regarded as forbearance to enforce the claim of the bank to recover the loans advanced. The settlement consisted of two constituent elements---paying by the bank of the value of the jewellery pledged with it against receipt from the constituent the amount which was recoverable by the bank. The first element of the transaction would appropriately be deemed expenditure and such expenditure having been laid out for protecting and furthering the business of the bank was properly admissible under section 10(2) (XV) of the Income-tax Act, 1922. Appeal dismissed.