1966 (9) TMI 2

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..... r, it could not be treated as a money-lending business, and (2) whether, in the circumstances of the case, there was money-lending business, and the sum of Rs. 9,000 is a bad debt. The facts relevant for the determination of this question may shortly be stated. The assessee is an individual and the relevant accounting period is 1956-57 ending on December 31, 1956. His sources of income were property, shares in two registered firms, and other sources. The assessee maintained a set of account books in which he recorded the amounts which he borrowed from others for the purpose of advancing to the two firms of which he was a partner. The share of the income received from the firms was credited in those books and the interest payments on borro .....

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..... lared by the assessee for the assessment year 1955-56, and it was also taxed. On the same day, i.e., September 30, 1954, the assessee made a fresh advance of Rs. 4,400 to each of the three brothers, who became divided, and separate ledger folios were opened. In 1955, all the three brothers filed insolvency petitions and on November 29, 1956, the assessee transferred these loans to one Venkatakrishnaiah for Rs. 1,500 each. The balance of Rs. 3,000 due from each brother was written off in the ledger as a bad debt on the same day, viz., November 29, 1956, and this amount (Rs. 9,000), which is written off in the account, is claimed as bad debt. The Tribunal observed in its order as follows : "....as far as financing of the firms was concern .....

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..... to carry on the business of money-lending. Having arrived at the above conclusion, the next question to be considered is whether, in the circumstances of the case, the moneys advanced by the assessee do not merely represent the capital he was bound to contribute, but constitute money-lending business. But, for answering this, there is no evidence on record. The first question referred to us, viz., whether or not the advances made by a person to a firm of which he is a partner constitute money-lending business is, therefore, answered in favour of the assessee and against the department. The Tribunal will dispose of the case in the light of this answer. In the circumstances of the case, the parties will bear their own costs. First quest .....

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