TMI Blog1948 (8) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... see is the a manager of a Hindu undivided family. He carried on a money-lending business in partnership with one Kasi Aiyar. The business of this partnership was stopped in 1931, but the firm was not dissolved and continued to realised the outstandings due to it. A separate set of books was being maintained in respect of the realisations of outgoings of the firm. One of its outstanding debts was that due from one Kidar Pillai Maracair on a mortgage. There were some collections towards this debt, and finally a decree was obtained by the firm against the debtor sometime in 1940. In execution of the decree, certain lands of the debtor were sold. On 11th September, 1942, a sum of ₹ 16,395-14-10 was still due. On that date, the two partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the assessee's claim on the ground that the debt had been taken over by the assessee as part of his money-lending business and the loss was sustained in the separate business carried on by him. On appeal, the Appellate Tribunal confirmed the decision of the Appellate Assistant Commissioner. Thereupon, the Commissioner made an application under Section 66 (1) for a reference to this Court, and the Tribunal has referred the following two questions for our decision :- (1) Whether there is any material for the Tribunal's finding that the bad debt of ₹ 5,880 claimed by the assessee, arose in respect of a loan made in the ordinary course of his money-lending business, within the meaning of Section 10 (2) (xi) of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of this contention. Two decisions of the Calcutta High Court which were cited to us, Bissendoyal Doyaram, In re [1938] 6 I.T.R. 165, and Chimanlal Rameswarlal v. Commissioner of Income-tax, Bengal [1940] 8 I.T.R. 408, were long before the enactment of Section 10(2)(xi) of the Income-tax Act. It is, therefore, unnecessary to consider whether the propositions laid down in the two decisions are sound. On the other hand, there is a decision of the Bench of this Court in Commissioner of Income-tax, Madras v. Venkatasubbiah Chetty [1946] 14 I.T.R. 227, the ratio decidendi of which, we think, applies to the present case. In that case, the assessee was the manager of a Hindu joint family carrying on a money- lending business. In 1933, a sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notes, but they were promissory notes which had been renewed by the borrowers in favour of the assessee. Having regard to the fact that the Income-tax authorities had since the dissolution regarded those loans as part of the family's business and taxed the family on the interest paid in respect of them, the learned Chief Justice expressed his surprise that the department should contend that clause (xi) did not apply. Though it is true that there were in that case certain facts the like of which are not to be found in the present case, we consider that the principle underlying the decision in that case applies equally to this case. Though in that case fresh promissory notes were executed by the borrowers in renewal of the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been accepted by us in view of the fact that subsequent to the date of that entry there were substantial realisations. On these facts, it cannot be said that there is no material for the Tribunal's finding that the bad debt ₹ 5,880 arose in respect of a loan made in the ordinary course of the assessee's money-lending business. The answer to the first question must be in the affirmative. In our opinion, the answer to the second question must also be in the affirmative. On the facts already narrated, it is clear that the debt became irrecoverable in the accounting period. It is not as if subsequent to the entry on September 12, 1942, there was no attempt to make further realisations. As already mentioned, there were such fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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