9911796707
|
Home
Issues Involved:
Assessment of deduction towards bad debts claimed by the assessee for the assessment year 1964-65. Summary: The High Court of Madras delivered a judgment regarding the deduction claimed by an assessee, a textile mill manufacturing yarn, for bad debts in the assessment year 1964-65. The assessee had returned an income of Rs. 2,53,368, and claimed a deduction of Rs. 1,37,760 towards bad debts related to advances made to Vijayakumar Cotton Press and another party. The Income-tax Officer disallowed the claim stating that the advances were not for the business purposes of the assessee. The Appellate Assistant Commissioner and the Appellate Tribunal upheld this view, leading to the addition of Rs. 1,37,760 to the assessee's income. Upon reference by the Appellate Tribunal, the High Court considered whether the Tribunal was justified in disallowing the claim for deduction of Rs. 1,37,760 as bad debts or trading loss. Referring to a previous case involving the same assessee, the court noted evidence indicating that the funds were diverted for personal benefit rather than business purposes. Based on this, the court agreed with the Tribunal's conclusion that the borrowed funds were not utilized for business purposes, and the amounts did not qualify as business debts. The court upheld the addition of Rs. 1,37,360 to the assessee's income, in line with the Tribunal's findings and previous court decisions. In conclusion, the High Court affirmed the Tribunal's decision, stating that the amounts in question were not deductible as business debts, either as bad debts or trading losses, as they were not utilized for the business purposes of the assessee. The court answered the question of law in the affirmative, against the assessee, and ruled that there would be no order as to costs.
|
