TMI Blog1993 (8) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... w deduction of Rs. 1.21 crores as bad debts?" The facts, inter alia, leading to this reference as appearing from the statement of case are that the assessee is a limited company deriving income from business in the manufacture of tyres, tubes, etc. Between November, 1976, and September, 1977, the assessee exported goods to several parties in Turkey amounting in all to Rs. 2,72,19,587. The Central Bank of Turkey, however, did not transfer the amount deposited by the purchasers in Turkey to India. In view of the extremely critical foreign exchange reserve position, the Government of Turkey imposed a ban on all remittances out of Turkey. As a result, the amount deposited in the Central Bank of Turkey remained there. The normal period of 90 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subjected to tax in the year in which the provision was created. The sum of Rs. 1.21 crores claimed as bad debts was arrived at after valuing the Lira deposited in the Central Bank of Turkey in terms of rupees as on December 31, 1979. There was another fact which had to be taken into consideration, namely, that a decree was promulgated on January 25, 1980, by the Government of Turkey under which the debts of the foreigners would be paid only after 54 months, and that too, in small instalments over a period of further ten years. The assessee got the debt as on December 31, 1979, valued by its bankers who opined that after discounting the value as on December 31, 1979, it would be only Rs. 28,85,234 which was less than the billed amount of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 26 lakhs. The assessee appealed to the Tribunal and urged that the claims of the assessee should have been allowed. On the other hand, the Department resisted the claims of the assessee. The Tribunal considered the contentions of both the parties and held as below: "....we find that though there is a provision under section 36(1)(vii) for allowance of even a part of a bad debt, there is no such provision for allowing a part of a business loss. Evidently, the transactions of 1976 and 1977 had not yet come to an end because negotiations were still going on. We do not find any provision in the Act to allow business losses part by part in a piecemeal way. Hence, we agree with the Revenue authorities that no business loss could be all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions of the parties and also the records referred to us and the decision cited from the Bar. The Tribunal was justified in holding that the business loss cannot be allowed part by part in a piecemeal way, and, as such, no business loss could be allowed in the calendar year 1979. The Tribunal was justified in coming to its conclusion on the basis of the fact that the directors of the assessee-company have also taken into account only the bad debt of Rs. 1.21 crores in the printed accounts and they have not referred to any business loss suffered by the company during the year under consideration. The said finding of the Tribunal is a finding which has not been disputed. The Tribunal, however, allowed the bad debt since the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) the question must be looked at from the practical point of view as to whether the debt has become irrecoverable and bad. It was also settled that the entry by way of write-off is prima facie evidence of the debt having become bad but not a conclusive criterion and the onus rests on the assessee to establish that the debt has become bad in the relevant year. We find that the Tribunal in its finding has been guided by all these basic principles and there is no perversity or infirmity in the finding of fact by the Tribunal. The Tribunal was, therefore, justified in upholding the order of the Commissioner of Income-tax (Appeals) by disallowing the business loss. We are, therefore, of the view that the decision of the Tribunal does not c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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