TMI Blog1962 (9) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... a bad debt arising during the course of the money-lending business of the assessee? (2) What was the true nature of the transactions and whether in view of the true nature of the transactions, the debt could still be claimed as bad debts in working out the assessable income of the assessee? (3) Whether there was any material on which the Tribunal could arrive at the finding that the debts had become bad prior to the year of account in question? Before dealing with the facts pertaining to these questions, it may be noticed that Mr. Gulati, the learned standing counsel, had raised a preliminary objection that this court was no longer competent to decide this reference. Ajmer now forms part of the Rajasthan State, and the Rajas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id by the assessee on Messrs. Amolakchand Mewaram's account. In 1931 the debits to the account of the debtor rose to about ₹ 11,00,000. In November, 1931, a part of this debt was secured by means of mortgage of the immovable properties of Messrs. Amolakchand Mewaram for ₹ 3,00,000. This sum was credited to the current account and the debit raised in a new account called Amolakchand Mewaram mortgage account . In the accounting year 1932-33, the assessee took over the interest of Messrs. Amolakchand Mewaram in the managing agency of Edward Mills Ltd. and also the share of Edward Mills Ltd. for ₹ 4? lakhs for which also a credit was given in the current account in the same year. On November 3, 1932, the assessee also obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court was obtained in 1932 against the debtor who is the father-in-law of the younger brother of the karta of the assessee family. Although a decree was obtained in 1932 no effort was made to execute the decree and recover the amount. These two debts were claimed to have become bad in the relevant year of account. The departmental officer rejected the claim and on further appeal to the Tribunal the claim of the assessee met the same fate. In respect of the first debt of ₹ 3,25,000, on the basis of a pronote taken on November 3, 1932, from Amolakchand Mewaram, the debtor, the Tribunal found that the money was not advanced to this firm in the course of its money-lending business but that there were continuous dealings between the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the decree of the Bombay High Court was passed in 1932 no effort whatsoever had been made to recover the amount and further that the debtor was the father-in-law of the younger brother of the karta of the assessee family. It was also found on the evidence produced that the said amount was not advanced in the course of money-lending business and the debt had become bad prior to the year of account. A reference having been asked under section 66(1) and the Tribunal having declined to make a reference, this court, as already observed, directed the Tribunal to state a case under section 66(2). This has been done and the questions set out hereinabove have been referred. Mr. Pathak, learned counsel for the assessee, has contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amounts due. The evidence of the assessee and of the debtor, apart from its being only self-serving statements, is extremely vague and it does not at all show that there could possibly have been any ray of hope still lingering in the assessee's mind that any part of this debt of ₹ 3,25,000 could be recovered. No doubt the debtor has given a long list of suits in which he was expecting that decrees would be passed in his favour but most of those expectations were shattered long before the relevant year of account. At best, he could only have had hope of realising something from a decree against Baij Nath Gauri Datt but even that suit was decided by the civil judge of Mathura on the 29th March, 1940, against him. Even if this cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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