1968 (12) TMI 28

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..... r, on the facts and in the circumstances of the case, the sum of Rs. 18,237 is liable to be allowed as a deduction under the provisions of section 10(2)(xi) ? 2. Whether, on the facts and in the circumstances of the case, the assessee was eligible for deduction under section 12(2) of the sum of Rs. 26,800 representing uurealised dividends taxed in earlier years in computing the total income for t .....

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..... terest as interest income. The assessee maintained a mercantile system of accounting. In those assessment years, the interest offered for tax was duly brought to tax. In the next two years he had made similar debits of interest but had not offered the amounts for tax on the ground that they represented unrealis able interest. His stand was accepted ultimately by the Tribunal and the said items wer .....

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..... sistant Commissioner and the Income-tax Appellate Tribunal. With regard to the first item, the claim of the assessee is that it should have been allowed as a bad debt of his business under section 10(2)(xi) or at any rate it should have been allowed on the general principles of computation of the real income of business under section 10. As regards the second item, his contention is that, since t .....

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..... vances made by the assessee to the company were the result of the relationship which the assessee had with the company inasmuch as he was a shareholder of the company to the extent of 1/3rd of its subscribed share capital and was interested in it. In view of these findings, it is impossible to look upon the deduction as a bad debt of the business under section 10(2)(xi) of the Indian Income-tax Ac .....

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..... uld be allowed to be deducted on that score is, in our opinion, not capable of being justified at all. As to the other item of Rs. 26,800, the claim for deduction, in our opinion, is even less sustainable. What is allowed as a deduction under section 12(2) is expenditure incurred solely for the purpose of earning the dividend income. If the assessee failed to realise the dividend income, the non- .....

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