TMI Blog1990 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... y DR. T. K. THOMMEN J. -These appeals under certificate arise from the common judgment of the High Court of Gujarat in CIT v. Poonjabhai Vanmalidas [1976] 105 ITR 388. The assessee is the same in all the cases. The assessment years in question are 1964-65, 1965-66 and 1967-68. In the relevant previous years, the assessee received certain amounts and they Were assessed under section 41(4) of the Income-tax Act, 1961 (herein after referred to as the "1961 Act"). The contention of the assessee was that he was not assessable under section 41(4) of the 1961 Act because these amounts had been written off as bad debts in the year 1959-60 and his claim for deduction, though initially disallowed by the Income-tax Officer, was subsequently allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mely :- . . . (xi) when the assessee's accounts in respect of any part of his business, profession or vocation are not kept on the cash basis, such sum, in respect of bad and doubtful debts, due to the assessee in respect of that part of his business, profession or vocation, and in the case of an assessee carrying on a banking or money-lending business, such sum in respect of loans made in the ordinary course of such business as the Income-tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee : Provided that if the amount ultimately recovered on any such debt or loan is greater than the difference between the whole debt or loan and the amount so allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt or part of debt and the amount so allowed, the excess shall be deemed to be profits and gains of business or profession, and accordingly chargeable to income-tax as the income of the previous year in which it is recovered, whether the business or profession in respect of which the deduction has been allowed is in existence in that year or not . ... " This sub-section refers to the deduction allowed in respect of a bad debt under the provisions of section 36(1)(vii) of the 1961 Act which reads as follows: "36. Other deductions.-(1). The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28. - . .. (vii) subject to the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her section 36 ( 1 ) (vii) or section 41 (4). Rejecting the contentions of the assessee, the High Court held that there was no inconsistency between the relevant provisions of the two enactments and that section 24 of the General Clauses Act, 1897, was attracted as a result of which the order passed under section 10(2)(xi) in terms of which the amounts had been written off was deemed to have been made under the re-enacted provisions, as contained in section 36(1)(vii) and, consequently, the amounts recovered on any such debt were charge able under section 41(4). Section 24 of the General Clauses Act, 1897, in so far as it is material, reads : "24. Continuation of orders, etc., issued under enactments repealed and re-enacted.-Where any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 41(4). Consequently, when a debt is written off by an order in terms of section 10(2)(xi) of the 1922 Act, the Income-tax Officer exercises the same power as he would have exercised on the enactment of section 36(1)(vii) of the 1961 Act. These two provisions are, therefore, consistent with each other. Section 36(1)(vii) is subject to the provisions of sub-section (2) of that section. Therefore, both sections 36(1)(Vii) and 36(2) of the 1961 Act, being two of the ingredients of section 10(2)(xi) of the 1922 Act, must be read together with reference to an order under which debts had been written off. Accordingly, in the light of section 24 of the General Clauses Act, 1897, the relevant order made under section 10(2)(xi) of the 1922 Act wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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