Appeals from the judgment and order dated January 7, 1966 of the Calcutta, High Court in Income tax References Nos.
5,60,199 was written off in the books of the assessee companypany.
Subsequently it was sought to be established before the Income tax Officer, that an indemnity had been given to the Gwalior Industrial Bank Ltd. in the matter of the loan account of the U.P. Sales Corporation Ltd. and the payment had been made on its failure to clear the debt of the Bank.
Mitra, S. K. Aiyar, R, N. Sachthey and B. D. Sharma, for the appellant in both the appeals .
Starch Products had appointed the U.P. Sales Corporation Ltd. as its selling agent.
That companypany went into liquidation and as the assessee companyld number recover anything from it a sum of Rs.
The assessee claimed to have stood guarantee for a loan of Rs.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
The claim was number entertained either by the Income tax Officer or the Appellate Assistant Commissioner.
K. Sen, O. P. Khaitan and B. P. Maheshwari, for the respondent in both the appeals .
The Appellate Assistant Commissioner companysidered the question of the aforesaid amount being an admissible deduction or allowance under S. 10 2 of the Income tax Act 1922.
7 and 176 of 1961.
According to him the advance was number a bona fide money lending investment.
Before the Income tax Officer the said amount Was claimed as bad debt vide assessees letter dated September 12, 1957.
5,60,199.
5,60,199.
2380 and 2381 of 1966.
The Judgment of the Court was delivered by Grover, J. These appeals by certificate arise out of a companymon judgment of the Calcutta High Court in two Income tax References.
The assessee is a private limited companypany.
6 lakhs which was advanced to the U.P. Sales Corporation Ltd. by the Gwalior Industrial Bank Ltd. The borrower failed to pay the loan which on August 2, 1948 stood at Rs.
According to the In companye tax Officer the assessee was asked to produce evidence about the guarantee having been furnished but he was number satisfied that there was any directors resolution authorising the furnishing of a guarantee or that the document purporting to be a guarantee had been properly stamped or that there was other sufficient evidence to establish the transaction.
The Income tax Officer rejected the explanation furnished by the assessee for advancing such a large amount to a companypany whose financial position was far from satisfactory.
Starch Products Ltd. was one of the various companypanies which was being managed by the assessee.
Thereafter the assessee treated the U.P. Sales Corporation Ltd. as its debtor for the aforesaid amount.
This amount was paid by the assessee pursuant to the guarantee.
It carried on the business of banking and financing as also of managing agency.
