TMI Blog1971 (1) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... lations with a firm styled "Bhojaji Sobhachand" carrying on business at Bombay as importers of yarn and also as agents and adathias. Sobhachand, one of the partners of Bhojaji Sobhachand, with 16% share in the profit and loss is the father of Seshmal, Ramniklal and Lakshmichand, partners of the appellants. In the books of account of the appellants which were maintained according to the mercantile system there was a current sarafi account in respect of their transactions with the Bombay firm in which were credited the funds transmitted from Bombay in respect of their business transactions. Entries relating to interest were posted till the end of Samvat year 2006 in the account on the amount due at the foot of the account. The following is a table showing the balances at the end of the Samvat years 2003 to 2008 and the interest charged thereon : Amount Interest At the end of Samvat year 2003 Cr. 16,051 00 -- " " " 2004 Dr. 1,02,188-4-5 Dr. 2,633-9-3 " " " 2005 Cr. 27,815-0-0 Dr. 483-1-9 " " " 2006 Cr. 11,975-0-0 Dr. 1,008-7-3 " " " 2007 Dr. 2,02,823-12-3 --- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue 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 : . . . . " Clause (xi) was in two parts. A bad and doubtful debt due to the taxpayer, written off as irrecoverable in the books of account was properly allowable in computing the taxable profits from business, profession or vocation, where accounts were not kept on the cash basis, if the debt was in respect of a loan made in the course of the taxpayer's business as a banker or money-lender, or when the taxpayer was carrying on any other business the debt was in respect of that other business. Before the Tribunal the appellants claimed allowance for the debt written off relying upon both the branches of section 10(2)(xi) and by the application under section 66(1) of the Income-tax Act a question covering both the branches of the section was also sought to be raised. But the question on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olly unrelated to the business of the taxpayer. The statement submitted by the Tribunal is also inadequate. It contains only a summary of the business relations between the appellants and the Bombay firm, a statement as to the accounts due at the end of each year at the foot of the account, the interest, if any, charged and a summary of the orders made by the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal. The statement of the case does not analyse the evidence and throws no light upon the two branches of the argument raised before the Tribunal and which, in our view, arose out of the question on which they were required to submit a statement of the case. Counsel for the revenue, however, contended that there are three important circumstances which appear from the order of the Appellate Assistant Commissioner and the Income-tax Officer from which it may be inferred that the advances made by the appellants to the Bombay firm were not in respect of loans in the ordinary course of the business of the appellants, nor in respect of their other business. Counsel said that, (1) Sobhachand Amarchand, one of the partners of the Bombay firm, is the father of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months from the date on which the papers reach the Tribunal. January 21, 1971 : The matter came for final hearing before J. C. SHAH C. J., K. S. HEGDE and A. N. GROVER JJ. M. C. Chagla, Senior Advocate (B. R. Agarwala, Advocate of Gagrat Co., with him), for the appellant. S. T. Desai, Senior Advocate (R. N. Sachthey and. B. D. Sharma, Advocates, with him), for the respondents. JUDGMENT January 21, 1971 : The judgment of the court was delivered by HEGDE J.-- The appellant-firm (which will hereinafter be referred to as "the assessee") carried on business in drugs, chemicals, mercury, comphor and art silk yarn as also in money-lending, over a number of years. The accounting year with which we are concerned in this appeal is Samvat year 2008, commencing from October 31, 1951, and ending on October 18, 1952. The firm consisted of two partners, Mohanlal Bagmal and Seshmal Sobhachand. Two minors, Ramniklal Sobhachand and Lakshmichand Sobhachand, were admitted to the benefits of the partnership. The assessee had dealings for several years with a firm known as "Bhojaji Sobhachand" (to be hereinafter referred to as "the Bombay firm"). Sobhachand Amarchand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. This court took the view that the question framed at the instance of the High Court did not bring out the real question arising for decision. It, accordingly, reframed the question as follows : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal erred in disallowing a sum of Rs. 2,68,385 written off by the assessee in their books of account as irrecoverable ?" By its order dated July 29, 1969, this court called upon the Tribunal to submit a supplementary statement of case on the reframed question. The Tribunal, accordingly, submitted a fresh statement of the case on the question referred. But, that statement merely catalogued the arguments advanced at the Bar. The Tribunal did not give any findings on the points arising for decision. Hence, by its order dated April 7, 1970, this court directed the Tribunal to submit a further statement. The Tribunal has accordingly submitted a further statement. The facts found by the Tribunal are found in paragraphs 11 and 12 of the statement. They read : " 11. We have taken into consideration the available materials and the rival submissions. The only facts in favour of the assessee are that incide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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