TMI Blog1993 (8) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... iew in allowing the assessee's claim of bad debts for the above sums? 2. Whether, there was any material for the Tribunal to hold that the assessee could have entertained a bona fide belief that the loans of ₹ 40,262 and ₹ 6,122 from Associated Industrial Products Company and Mining and Equipment Manufacturers, respectively, became recoverable and whether such finding and order of the Tribunal is otherwise unreasonable and perverse? 2. Shortly stated, the facts are that the assessee, Algemene Bank Netharland, N.V., is a non-resident company doing banking business in India. The assessment year involved in this reference is 1979-80. 3. The assessee claimed the following two items as bad debts while computing the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee came to the clear conclusion on the basis of the investigation made by it that these loans had become irrecoverable notwithstanding the fact that decrees had been obtained against the parties. Relying on the decision in the case of Jethabhai Hirji and Jethabhai Ramdas v. CIT [1979] 120 ITR 792 (Bom.), it was urged that the claim of the assessee should have been allowed as the assessee bonafidely believed that the loans had indeed become irrecoverable and so wrote off the same from its books of account. On the other hand, it was urged on behalf of the department that there was still hope of recovery because of the decrees obtained by the assessee even though the investigation of the assessee showed that there were no assets of the debto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e previous year under consideration. The bank obtained a report dated 8-2-1978 of a private investigator. This report states that one of the debtors, Mining and Equipment Manufacturer did not have any asset in order to repay the debt and no legal proceeding for realisation of the dues would be justified. Similarly, in the case of the other debtor, i.e., Associated Industrial Products Co., a private investigator was engaged to enquire into the financial position of the said debtor and on 2-1-1978, the investigator reported that there were no assets out of which the assessee could hope to recover the amount due to it by the said concern and both the partners of the said concern had been declared insolvent by the Court. The only ground on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made it plain that recovery would not be possible. In this case, no one has challenged the reports of the private investigator. The bank, as a prudent business concern, may, on the facts of a particular case, bonafidely decide that there is no ray of hope of recovery of any part of the debt. In view of the involved circumstances of the debtor, continuance of the proceedings for recovery may be found to be utterly meaningless as the only result of such pursuit is that good money would be spent without any hope of return. If the debtors have no assets, decree will remain unexecutable and will be mere paper decree. 8. In our view, on the facts and in the circumstances of this case, the assessee could reasonably hold the belief that the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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