The Income tax Officer treating this claim as one under s. 10 2 xv of the Act, disallowed it.
On appeal to the Income tax Appellate Tribunal it was held to be a bad debt and an allowable deduction as it was incurred as a result of the business activities which the respondent firm was carrying on with the numberresident principal.
3,20,162.
3,78,491 under s. 42 1 of the Act and after allowing for the amounts which were in its hands the account of the principal number resident showed a debit balance of Rs.
For the years 1942 43, 1943 44, 1944 45 and 1945 46, the respondent firm was treated as the agent of the numberresident principal under s. 43 of the Income tax Act which will hereinafter be termed the Act for the purpose of income tax and Excess Profits Tax.
For the year of assessment, 1953 54, the respondent firm treated this amount as a bad debt and claimed it as a deductible loss to be set off against profits.
Appeal from the judgment and order dated August 23, 1956, of the Bombay High Court in Income tax Reference No.
It used to supply goods from India to the numberresident principal, who on his part, was sending companyton to the respondent and other merchants for sale in India.
CIVIL APPELLATE, JURISDICTION Civil Appeal No.
The Judgment of the Court was delivered by KAPUR, J. This is an appeal by special leave brought by the Commissioner of Income tax against the judgment and order of the High Court of Bombay answering the question in favour of the assessee.
December 6.
The respondent firm had to pay in all Rs.
21 of 1956.
Hardyal Hardy and D. Gupta, for the appellant.
It was carrying on the business of export of cloth and kariana i.e., miscellaneous goods to Aden, Saudi Arabia and sudan.
312 of 1959.
V. Viswanatha Sastri and I. N. Shroff, for the respondent.
At the instance of the Commissioner of Income tax, the case was stated to the High Court and the High Court modified the question and answered the same in the affirmative, i.e., against the appellant.
It was treated as the agent of a number resident principal Haji Mohamed Syed Ali Barbari of Port Sudan hereinafter referred to as the numberresident principal.
The facts of the case shortly stated are these The respondent is a registered firm carrying on business as companymission agents.
