1962 (3) TMI 8

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..... amount as a bad and doubtful debt under section 10(2)(xi) of the Indian Income-tax Act. The amount of Rs. 4,22,582 consisted of three items as follows : (a) Rs. 2,11,089 due from the firm styled Messrs. Nandlal Inderchand under an account which commenced in the year 1943. In this account the debtor had pledged shares of the value of Rs. 28,000 odd. (b) Rs. 1,02,325 originally due from a firm carrying on business in the name of B. I. G. Co., Calcutta. (c) Rs. 1,09,168 originally due from a firm carrying on business in the name of Fulchand Srinarain, Calcutta. For the amounts due under the accounts styled Messrs. B. I. G. Co. and Fulchand Srinarain, there was no security. These two accounts were transferred by the assessees on Decemb .....

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..... narain, but the High Court, by order dated July 31, 1957, directed the Tribunal to state a case under section 66(2) on the following question : " Whether, in the circumstances of the case, the income-tax department was legally justified in rejecting the claim of the assessee under section 10(2)(xi) of the Income-tax Act with regard to the amount of Rs. 2,11,493 claimed as bad debt for the assessment year 1950-51?" The High Court at the hearing of the reference held that the conclusion whether a debt had become irrecoverable and was to be treated as a bad debt in 1947 was one of fact and not liable to be reopened in a reference under section 66 of the Income-tax Act, for there was evidence on which the conclusions of the Appellate Assist .....

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..... the income-tax authorities was that they were interested in those businesses. Again, apart from the pledge of shares of a small value, there is no evidence of any assets of, Messrs. Nandlal Inderchand which could be resorted to for satisfying the liability for debts due by the two firms---B. I. G. Co. and Fulchand Srinarain. If those two debts had become irrecoverable in 1947, by merely amalgamating them with the debt due from Messrs. Nandlal Inderchand----which was not then irrecoverable---those debts could not be revived so as to enable the assessees to write them off in a later year. In the account of Messrs. Nandlal Inderchand, an amount exceeding rupees two lakhs was due and the value of the shares pledged was less than 1/7th of the to .....

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