TMI Blog1957 (2) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the Tribunal has been required to state the case is as follows: Whether, on the facts and in the circumstances of the case, the Tribunal was justified in disallowing the said sum of ₹ 70,000 (Rupees seventy thousand) which was claimed as a bad or doubtful debt or as an irrecoverable loan. We shall, therefore, confine ourselves to the facts relevant to the question set out above. 3. The assessee, Karamsey Govindji, is an individual. He carries on the business of speculation and money-lending. He also receives income from property and dividends. 4. For S.Y. 2002, relevant for the assessment year 1947-48, the assessee returned a loss of ₹ 68,858. The assessment for the year 1947-48 was made on a loss of ₹ 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowing the bad debt wrote as follows: The accounting year ends on 12th November, 1947, while the debtor is stated to have been adjudicated insolvent on 31st January, 1949. Thus, the bad debt claimed had not really become bad during the accounting period which ended on 12th November, 1947. It is further seen that the assessee has advanced a further sum of ₹ 50,000 to Gangaram Nathaji in the subsequent year, i.e., S.Y. 2004. It is not understood on what security such huge amounts were advanced to the debtor. It is stated that the debtor was producing certain pictures in the name of Balwant Films. The assessee appears to have claimed the bad debt during the accounting period to reduce the tax liability, as there is a big profit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other creditors including ₹ 70,000 due to appellant 1,30,000 The Appellate Assistant Commissioner dismissed the appeal saying that the debt had not become had during the accounting period. A copy of the Appellate Assistant Commissioner's order is annexure 'C' and forms part of the case. The Appellate Assistant Commissioner did not place reliance on a statement made by the debtor to the effect that the repayment of the loan was demanded in September, 1947. It appears from the Appellate Assistant Commissioner's order that a letter was produced before him to show that the picture Ajka Farhad, which the debtor had produced, was offered to be purchased for ₹ 60,000 in Sept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding of the Appellate Assistant Commissioner, the Tribunal was justified in giving a finding that there is no material on record to show that 'the two pictures were mortgaged on the dates mentioned'. 10. The assessee was a money-lender. The loans advanced to B.A. Joshi were advanced in the course of the assessee's money-lending business. The question of a debt becoming doubtful does not arise in view of the language used in section 10(2)(xi) of the Act. The only question which the Tribunal had to determine was: whether the loan which the assessee had advanced to the debtor had become irrecoverable in S.Y. 2003, and the Tribunal's finding is that there was no sufficient material to hold that the debt had become irrecov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was evidence on the record for the finding of the Tribunal that the loan had not become irrecoverable in Samvat year 2003 ; and it cannot be said that there is no evidence to this effect. The most important piece of evidence is this, that Joshi the debtor had produced a film by name Ajka Farhad, which film was ready either in August, 1947, or in October-November, 1947, which is not clear from the record; but, in any case, it was ready a short time before this loan was written off. It is difficult to take the view that, while the debtor had such a valuable asset with him which had not yet been exploited it could be said by the assessee that the loan advanced by him to the debtor had become irrecoverable. It is pointed out by the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of this suit and the ultimate adjudication of Joshi as insolvent. Mr. Pandit has then asked us to consider the scheme of section 10(2)(xi) and he says that, if ₹ 70,000 is written off by the assessee, the Income-tax Officer must estimate what part of this ₹ 70,000 is irrecoverable, and inasmuch as the Income-tax Officer to say that no has not discharged his statutory function under section 10(2)(xi). Now under section 10(2)(xi) it is open to the Income-tax Officer to say that no part of the bad debt claimed by the assessee had become irrecoverable in the year of account, or he may say that part of it had become irrecoverable. In this case it is clear from his order that he takes the view that no part of this ₹ 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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