49,13,316 under the head of bad debt and trading loss written off in the profits and loss account of the appellant company we are only companycerned in this appeal with this item and, therefore, it is number necessary to numberice any other particulars of the assessment.
Since the incorporation it has been carrying on business of manufacturing cloth.
Before the Annual General Body Meeting they used to bring large amounts into the accounts of the companypany and show that they had paid off their debts.
For the assessment year 1941, the appellant company submitted its return of income and claimed thereunder a deduction, among other items, a sum of Rs.
Pursuant to the power companyferred on the Managing Agents under the said agency agreement and the said resolution, Karimbhai Ibrahim Sons Ltd. borrowed large sums of money from outsiders, entered them in the appellant companys accounts and invested large sums with themselves in current account with the companypany in terms of the said resolution and utilised the same for their own purposes.
On June 8, 1926, the Board of Directors of the appellant companypany passed a resolution to the following effect Resolved that Surplus Fund of the companypany be invested with the agents in current account with the companypany at the same rate of interest viz.,
Appeal from the judgment dated November 9, 1960, of the Madhya Pradesh High Court in Civil Miscellaneous Appeal No.
The appellant, Indore Malwa United Mills Ltd., is a public limited companypany incorporated and registered under the Indore Companies Act, 1914.
Hence the present appeal.
The facts may be briefly stated.
Sen, Balwan Singh Johar and 1.
6,41,913 2 0 as bad debt and disallowed the amount due from Karimbhai lbrahim Sons Ltd. on the ground that the said borrowings were number made for the purpose of the business of the companypany.
Under the Memorandum of Association of the said companypany, for the purpose of the textile business it was authorized to raise or borrow money from time to time and to invest its funds, inter alia, in loans to others.
Me Assessing Authority allowed only Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
On November 28, 1929, the appellant company entered into an agreement with M s. Karimbhai Ibrahim Sons Ltd. where under they were appointed as the Managing Agents of the appellant company in place of M s. Karimhai Ibrahim Co. Ltd. On July 19, 1932, the Board of Directors reaffirmed the resolution of June 8, 1926.
N. Shroff, for the respondents.
40 of 1955.
After satisfying the General Body they would again withdraw large sums for their purposes.
42,63,090 14 7 should have been allowed as a trading loss in companyputing the profits of the appellant company under S. 3 of the Indore Industrial Tax Rules, 1927.
1013 of 1963.
The Judgment of the Court was delivered by Subba Rao J. This appeal by certificate preferred against the order of the High Court of Madhya Pradesh, Indore Bench, raises the question whether an item of Rs.
For the purpose of carrying on the business, the appellant company originally appointed M s. Karimbhai Ibrahim Co. Ltd. as its Managing Agents.
On appeal the Appellate Authority also took the same view.
In the year 1933 the Managing Agency companypany went into liquidation.
V. Viswanatha Sastri and Rameshwar Nath, for the appel lant.
Me General Body was also aware of the loans and indeed it approved the said transactions.
On further appeal, the High Court companyfirmed the finding of the Appellate Authority on the ground that the losses incurred by the companypany were really dehars the business of the companypany, though they might involve fraudulent companyduct of the Managing Agents.
