9911796707
TMI Blog1957 (2) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... accepts the case. 2. The question of law on which 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod 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 in speculation. Since the debt did not become bad in the accounting period, I disallow the same." A copy of the Income-tax Officer's order dated 24th March, 1953, is annexure 'A' and forms part of the case. 7. The assessee then appealed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 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 September, 1947. The letter is not on the file of the Appellate Assistant Commissioner. 8. The assessee then appealed to the Appellate Tribunal. It appears from the facts as placed before the Tribunal that the adjudication order was passed on 20th July, 1948, and a creditor's petition for adjudging him insolvent was presented in March, 1948, or thereabout. It was also brought to the notice of the Tribunal that an order adjudging B.A. Joshi was annulled by the Court on 6th September, 1950. A copy of the order of annulment is annex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 irrecoverable in the year of account. The question of law that would, therefore, arise is: "Whether there was evidence on the record for the finding of the Tribunal that the loan had not become irrecoverable in S.Y. 2003?" 11. As directed by their Lordships, we refer the question set out in paragraph 2 above. Y. P. Pandit with S. P. Mehta, for the assessee. G. N. Joshi with Advocate-General, for the Commissioner JUDGMENT The judgment of the Court was delivered by CHAGLA, C.J.--The question raised on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile 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 Assistant Commissioner that the assessee advanced these large amounts without any security because he expected to be repaid out of the exploitation of this film ; and what the assessee does is to write off this loan before the debtor had even had a chance to exploit the film. It may be, as has turned out subsequently, that the film was never released ; but at the relevant date the assessee could not have knowledge that this film would not be released or that if it was exploited it would be a failure. The other important p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med 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 ₹ 70,000 had become irrecoverable. As the only question before us is whether there is evidence to support the finding of the Tribunal, it is difficult to accede to Mr. Pandit's contention that the finding is without any evidence. There is no doubt that in fact ₹ 70,000 were never recovered by the assessee from his debtor. As we had occasion to point out before, the present income-tax law with regard to bad debts makes the position of the assessee extremely difficult. He may write off a debt in a particular year and May ..... X X X X Extracts X X X X X X X X Extracts X X X X
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