9911796707
|
Home
Issues involved: Determination of whether a sum of Rs. 44,234 was allowable as a bad debt or as a business loss for the assessment year 1965-66.
Bad Debt Claim: The assessee claimed a deduction of Rs. 44,234 on account of a bad debt arising from an advance made to Sri J. P. Srivastava, which remained outstanding for several years. The assessee received preference and ordinary shares in full settlement of the debt, with a claimed difference of Rs. 44,234 between the amount due and the face value of the shares. The Income-tax Officer considered this difference as a premium paid for the shares, not a bad debt. The Appellate Assistant Commissioner determined that the shares received were valued higher than the loan amount, leading to the dismissal of the appeal. However, the Income-tax Appellate Tribunal accepted the assessee's argument, noting the assessee's role as a money-lender and sole selling agent, and concluded that the amount of Rs. 44,234 was a business loss. Business Loss Determination: The Tribunal found that the assessee, being the sole selling agent of Bhopal Industries, derived significant income from this business. The loan of Rs. 5 lakhs to Sri J. P. Srivastava was considered intimately connected to the assessee's business activities, making any resulting loss a business loss. Consequently, the Tribunal upheld the assessee's claim that the sum of Rs. 44,234 constituted a business loss, rendering the question of it being a bad debt unnecessary for determination. Conclusion: The High Court answered the reference by confirming that the sum of Rs. 44,234 was allowable as a business loss, entitling the assessee to costs and counsel's fee assessed at Rs. 200 each.
|
