TMI Blog1990 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... d be allowed as a proper deduction while computing the business income of the assessee-family for the assessment year 1969-70 ?" The assessee is a Hindu undivided family represented by its legal heir Sri S. Balasubramanian. During the assessment years under consideration, the Hindu undivided family consisted of late Sri T. S. Srinivasa Iyer (who died on August 26, 1969) and his son, S. Balasubramanian. On September 6, 1962, there was a declaration of division of the assets of the family. On September 7, 1962, there was a partial partition in respect of certain assets. Some other assets were divided by a partial partition that took place on August 30, 1967. Finally on July 7, 1969, the entire family was partitioned giving rise to two separate Hindu undivided families of late T. S. Srinivasa Iyer and S. Balasubramanian, respectively. It is also accepted as a matter of fact that the joint family originally carried on a composite business under the name of Gemini Studios. The activities of the studio business consisted of pre-shooting and post-shooting of cinema films. The business consisted of various departments. There was a cine colour laboratory in which processing of films and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oductions, Rs. 453 was claimed in respect of Chitralaya films, Rs. 391 was claimed in respect of Kaveri Films and Rs. 32 was claimed in respect of Government of West Bengal. According to the Income-tax Officer, these amounts also related to the discontinued business and, therefore, he refused to allow the same. On appeal, the Appellate Assistant Commissioner confirmed the disallowances. Aggrieved, the assessee filed an appeal before the Tribunal. The Tribunal considering the fact that the assessee during the assessment years under consideration was doing a composite business in films and there was interlacing, interlocking and unity of control, came to the conclusion that the disallowance was not sustainable and accordingly deleted the addition made by the Department. Before us, learned standing counsel appearing for the Department contended that the colour laboratory and the printing department were given as a running concern to the minor Hindu undivided family and, therefore, this was really a case where the assessee closed down one of its businesses and not a line of its business. According to learned standing counsel, the assessee was not doing colour laboratory business du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel contended that the assessee's composite business of dealing in films in general like shooting, exploitation, exhibiting and collecting royalties, etc., continued even though the partial partition resulted in some or other of the assets going to the two separate minor Hindu undivided families. It is in the light of this it was submitted that the transfer of colour laboratory alone to the minor Hindu undivided family has to be looked into. In such circumstances, it was contended that the assessee cannot be said to have closed down its business at all during the assessment years under consideration. Accordingly, it was pleaded that the Tribunal was correct in deleting the abovesaid two additions. We have heard the rival submissions. In the assessment year 1969-70, the assessee claimed a deduction of Rs. 21,682 representing the rebate allowed to a customer towards laboratory charges and copy printing charges payable by that customer. So also, in the assessment years 1970-71, the assessee claimed a deduction of bad debts amounting to Rs. 17,693 which was written off on March 31, 1969. We have set out the facts in detail. These bad debts and rebate claimed as deductions re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dra Rao, K. Koteswara Rao and Co. 1967] 65 ITR 638 (SC) in the case of L. M. Chhabda and Sons v. CIT [1978] 113 ITR 647 (SC) in the case of B. R. Ltd. v. V. P. Gupta, CIT [1970] 77 ITR 739 (SC) in the case of Produce Exchange Corporation Ltd. v. CIT ; [1967] 63 ITR 632 (SC) in the case of CIT v. Prithvi Insurance Co. Ltd. ; [1966] 62 ITR 638 (SC) in the case of CIT v. Nainital Bank Ltd. [1960] 39 ITR 594 (Bom) in the case of Harihar Cotton Pressing Factory v. CIT; [1985] 151 ITR 616 (Mad) in the case of CIT v. Blue Mountain Estates and Industries Ltd. and [1950] 18 ITR 163 (Mad) in the case of K. S. S. Soundrapandia Nadar and Brothers v. CIT. We have carefully gone through all these decisions. All these decisions are rendered on the facts appearing in these cases. The question whether a debt is a bad debt or the question in which year it became a bad debt are questions of fact. Similarly, the question whether the activities of an assessee constitute the carrying on of a trade or business under a statute allowing deduction of bad debts from gross income is largely one of fact, the solution of which requires an examination of the facts in each case. According to the facts appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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