On 30 4 1925, the debtor executed a registered document admitting his indebtedness to the Maharajadhiraja to the extent of Rs.
The business of Sadashiva Vishwanath was apparently started as a partnership business, in which the debtor was to be the working partner entitled to /3/ share.
For this assessment year, the assessee changed his previous year into the financial year, and companysequently, the previous year for the present assessment year companyered a period of 18 months ending on 31 3 1957 The assessment has been made in the status of individual.
The assessee succeeded to the impartible estate of the Darbhanga Raj after the death of his father, Sir Maharaj dhiraja Rameshwar Singh, on 3rd July 1929, During his lifetime Sir Maharaja dhiraja Rameshwar Singh carried on extensive money lending business.
For the assessment year 1929 30, the question arose whether the assessee succeeded to the money lending business of his father with the meaning of Section 26 2 of the Income tax Act, as it then stood.
93,835/ .
4 8 1921, the assessees father Maharajadhiraja Sir Rameshwar Singh hereinafter referred to as the Maharajadhiraja entered into an agreement with one Kunwar Ganesh Singh hereinafter referred to as the debtor to open a firm or gaddi under the name of Sadhashiva Vishwanath at Calcutta to do ready and forward transactions in gunnies hessians, linseed, jute etc and also for dealings in stocks and shares.
38,09,571/8/ , and in part satisfaction thereof, transferred to the Maharajadhiraja various assets valued at Rs.
The sum of Rs.
20,74,973/ The debtor had also earlier executed two pronotes for Rs.
6,09,571/ on the ground that it represented interest pertaining to the original advance of Rs.
Between 1924 and 1925 several agreements were entered into, and later on, the Maharajadhiraja was recognised to be the sole owner of the business of Sadashiva Vishwanath.
2,50,000/ 17 9 1921 To Kunwar Ganesh Singh for dealings in shares 1,50,000/ For starting a Guddee sty led Sadashiva Vishwanath 2,00,000/ To Kunwar Ganeshsingh for Guddi and other business 4,50,000/ Between 29 12 1921 And 30 5 1922 By transfer from various banks 10,50,000/ 27 10 1922 For Howrah Jute share 2,00,000/ 2 11 1922 Kunwar for jute shares 4,00,000/ 30 11 1922 To Kunwar by transfer from banks 5,00,000/ Total 32,00,000/ The debtor, did number act up to the agreement and special efforts were made in 1923 to companylect as much as possible from him.
Extract from Appellate Assistant Commissioners order paragraphs 20 to 26 is annexed hereto as Annexure B The matter came up in second appeal before the Tribunal.
Both the Tribunal as well as the High Court has held against the department on the paint in issue.
32,00,000/ and number companynected with the claim of irrecoverable loan in question.
A decree was obtained on 14 3 1927 for Rs.
In pursuance of the registered deed dated 30 41925 the debtor executed a promissory numbere for the balance of Rs.
16,84,596/1/5 itself included interest of Rs.
The matter was agitated right up to the Privy Council in the case reported as Maharajadhiraj of Darbhanga v. Commissioner of Income tax 1934 2, I.T.R. 345.
10,55,025/ the Income Tax Officer held that it did number relate to the money 1ending transactions of the assessee.
The statement of the case relates to the assessment year 1957 58.
A part of the debt was realised and a sum of Rs.
25,000/ each.
16,64,596/ in the accounting year and claimed the same as a bad debt arising in his money 1ending business.
32,30,000/ as under 31 8 1621 To Kunwar Ganesh Singh Rs.
6,09,571/ due from the debtor on the original advance of Rs.
Their Lordships of the Privy Council held that the assessee succeeeded to the money lending business which had been carried on by his father in his life time.
The assessee wrote off the sum of Rs.
The Income Tax Officer disallowed the claim of Rs.
32,00,000/ .
As regards the balance of Rs.
In this agreement, the Maharajadhiraja was styled as the principal and the Debtor as the agent.
16,84,596/1/5 which was to carry interest at the rate of 9 per annum.
The facts of the case are fully set out in the Statement of the case submitted by the Tribunal to the High Court.
In the year 1925, the assessees father brought a suit in the Calcutta High Court against the debtor for Rs.
The assessee companytended that he did number succeed to the business and the Revenue held to the companytrary.
Extract of Income Tax Officers order pages 8 to 11 is annexed hereto as Annexure A. On appeal, by an elaborate order, the Appellate Assistant Commissioner upheld the disallowance.
32,00,000/ while the balance represented the outstanding amount out of the original advances aggregating to Rs.
16,84,596/ .
17,78,476/ inclusive of further accrued interest of Rs.
16,64,596/ remainted unrealised as due from the debtor.
By a registered deed dt.
