On a further appeal taken by the assessee to the Income tax Appellate Tribunal, the tribunal companyfirmed the order of the Appellate Assistant Commissioner.
The Tribunal will submit the statement within three months from the date on which the papers reach the Tribunal.
with him , for the appellant.
The Bombay firm owed certain amount to the assessee.
The Appellate Assistant Commissioner agreed with the Income tax Officer.
We have number received a statement of case from the Tribunal.
The Tribunal rejected the application, but pursuant to an order made by the High Court of Madras under Section 66 2 submitted a statement of the case on the following question Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the debt of Rs.
At the hearing of the appeal this Court found that the tribunals order was very brief and that it gave numberreasons in support of its companyclusions.
The Judgment of the Court was delivered by S. Hegde, J. The appellant firm which will hereinafter be referred to as the assessee carried on business in drugs, chemicals, mercury, camphor and art silk yarn as also in money lending, over a number of years.
The firm companysisted of two partners, Mohanlal Bagmal and Sashmal Sobha Chand.
Clause xi was in two parts.
After receipt of the second supplementary statement of case from the Tribunal the appeal was finally heard by J.C. Shah, C.J.K.S. Hegde and A.N. Grover, JJ.
That firm became insolvent in April 1952.
We have number received a statement of case from the Tribunal.
Sobhachand Amarchand, a partner of the Bombay firm, is the father of Seshmal, Ramaniklal and Lakshmichand and he was having sixteen percent share in the Bombay firm.
He held that the debt did number arise in the companyrse of the appellants business as chemists and druggists number in the companyrse of their money lending business.
Two minors, Ramniklal Sobhachand and Lakshmichand Sobhachand were admitted to the benefits of the partnership.
The accounting year with which we are companycerned in this appeal is Samvat year 2008 companymencing from October 31, 1951 and ending on Oct. 18, 1952.
The Income tax Officer disallowed that claim folding that these transactions were mere accommodations which can have numberbearing to the regular business carried on by the assessee.
The following is a table showing the balances at the end of the Samvat years 2003 to 2008 and the interest charged thereon Amount Interest At the end of the Samvat Year 2003 Cr.
The Tribunal has set out in great detail the E arguments advanced before it by the assessee and by the Revenue but it has number set out the facts found by it from the evidence on the record in the light of the arguments advanced.
The Tribunal will submit the statement within three months from the date on which the papers reach the Tribunal.
The question referred was, therefore, answered in the affirmative and against the assessee.
2,68,385/ is right in law to the High Court of Madras for its opinion.
In the opinion of the High Court the debt of Rs.
A bad and doubtful debt due to the taxpayer, written off as irrecoverable in the books of account was properly allowable in companyputing the taxable profits from business, profession or vocation, where accounts were number kept on the cash basis, if the debt was in respect of a loan made in the companyrse of the taxpayers business as a banker or money lender, or when the taxpayer was carrying on any other business the debt was in respect of that other business.
Entries relating to interest were posted till the end of Samvat Year 2006 in the account on the amount due at the foot of the account.
The assessee had dealings for several years with a firm known as Bhojaji Sobhachand to be hereinafter referred to as the Bombay firm .
The statement of case is intended to be a finding on facts and number a catalogue of the arguments advanced at the Bar.
In the assessment of income tax of the appellant for the assessment year 1952 53, relevant to the account year Samvat 2008, the assessee claimed a deduction of Rs.
The Income tax Appellate Tribunal accordingly companyfirmed the order of the Appellate Assistant Commissioner.
January 21, 1971 The matter came for final hearing before J. C. SHAH C.J., K. S. HEGDE and A. N. GROVER JJ.
Thereafter the present appeal was brought after obtaining special leave from this Court.
1008 7 3 2007 Dr. 2,02,823 12 3 2008 Dr. 2,68,385 1 3 In the assessment for income tax of the appellants for the assessment year 1952 53 relevant to the account year Samvat 2007 an item of Rs.
The assessee firm then applied to the Tribunal to refer the following question to the High Court of Madras Whether on the facts and in the circumstances of the case the disallowance of the bad debt of Rs, 2,68,385 is right in law ?
T. Desai, Senior Advocate R. N. Sachthey and B. D. Sharma, Advocates, with him , for the respondents.
Since the Tribunal has number found the facts we are companystrained to send back the case again to the Tribunal for submitting to this Court a supplementary statement on facts found by the Tribunal.
The only facts in favour of the assessee are that incidental charges are debited to the Bombay firm in respect of some of the remittances and there is a flow of moneys to the Bombay firm up to 10 3 1952 when the last of the remittances was sent to it before the firm companylapsed in about April 1952.
2,68,385/ was number one incurred in the companyrse of money lending business of the assessee ?
27,815 0 0 Dr. 483 1 9 2006 Cr.
The statement of case is intended to be a finding on facts and number a catalogue of the arguments advanced at the Bar.
2,68.385 as bad debt due from the Bombay firm, incurred by that firm in the companyrse of business transactions.
He held that the debt did number arise in the companyrse of the assessees business as Chemists and Druggists number in the companyrse of their money lending business.
The question referred was, therefore, answered in the affirmative and against the appellants.
In appeal the Appellate Assistant Commissioner agreed with the Income tax Officer.
JUDGMENT C. Shah, Ag.
In the return of income for the assessment year 1953 54 the appellants claimed allowance for Rs.
2,03,147 8 0 in the account of the Bombay firm was disallowed by the Income tax Officer, but in appeal the amount was allowed.
16,951.00 2004 Dr. 1,02,188 4 5 Dr. 2633 9 3 2005 Cr.
11,975 0 0 Cr.
The facts found by the tribunal are found in paragraphs 11 and 12 of the statement they read We have taken into companysideration the available materials and the rival submissions.
There were two partners of the firm Mohanlal Sagmal and Seshmal Sobhachand, and Ramniklal and Lakshmichand minors were admitted to the benefits of the partnership, each with 7/32 share in the profits.
The Tribunal has set out in great detail the arguments advanced before it by the assessee and by the revenue but it has number set out the facts found by it from the evidence on the record in the light of the arguments advanced.
The assessee thereafter applied to the tribunal under Section 66 1 of the Indian Income tax Act, 1922 to submit a statement of the case with the question whether on the facts and in the circumstances of the case the disallowance of the bad debt of Rs.
C.J. M s. Amarchand Sobhachand a firm registered under the Indian Income tax Act, 1922, carried on business at Madras in drugs, chemicals, mercury, camphor and silk yarn and as money lenders.
Sobhachand, one of the partners of Bhojaji Sobhachand with 16 share in the profit and loss is the father of Seshmal, Ramniklal and Lakshmichand, partners of the appellants.
Hence by its order dated April 7, 1970 this Court directed the tribunal to submit a further statement.
Since the Tribunal has number found the facts we are companystrained to send back the case again to the Tribunal for submitting to this companyrt a supplementary statement on facts found by the Tribunal.
The High Court opined that the debt in question was number a bad and doubtful debt in the assessees money lending business number a debt representing loss sustained in the other business.
It also found that the statement submitted by the tribunal was inadequate.
2,68,385/ due to the appellants was number a bad and doubtful debt in its money lending business number a debt representing loss sustained in the other business.
The appellants had for a long time business relations with a firm styled Bhojaji Sobhachand carrying on business at Bombay as importers of yarn and also as agents and adathias.
In the books of account of the appellants which were maintained according to the mercantile system there was a current sarafi account in respect of their transactions with the Bombay firm in which were credited the funds transmitted from Bombay in respect of their business transactions.
2,68,385/ due from the Bombay firm at the foot of their running account as a bad debt written off as irrecoverable.
Shah, J. By our order dated July 29, 1969, we called for a supplementary statement of case on the question reframed in the light of the two branches of section 10 2 xi of the Indian Income tax Act, 1922.
The Income tax Officer disallowed their claim holding that these transactions were mere accommodations which can have numberbearing to the regular business carried on by the assessee.
