1979 (6) TMI 56 - AT - Income Tax

Summary

Issues:
1. Allowability of bad debt claim of Rs. 30,557.
2. Disallowance of travelling expenses.

Analysis:

Issue 1: Allowability of bad debt claim of Rs. 30,557
The case involved a dispute regarding the allowance of a bad debt claim of Rs. 30,557. The assessee had claimed that the debts in question had become bad during the accounting year under consideration. However, the Income Tax Officer (ITO) found that the assessee was still in correspondence with the debtors regarding the recovery of the debts, indicating that there was still hope of recovery. The Appellate Authority Commissioner (AAC) upheld the ITO's decision, stating that the assessee failed to prove that the debts had become bad during the relevant period. The assessee argued that it was not necessary to show that the debtors had gone bankrupt, but rather to demonstrate a loss of hope of recovery. The assessee cited legal precedents to support its claim. After considering the submissions, the Appellate Tribunal found that debts due from certain parties had not become bad during the accounting period as the assessee was still corresponding with them for recovery. However, in the case of one party, it was determined that the debt had indeed become bad, and the claim for bad debt amounting to Rs. 7,629 was allowed.

Issue 2: Disallowance of travelling expenses
The Income Tax Officer disallowed Rs. 1,000 of travelling expenses, alleging that they were personal expenses of the partners. The AAC upheld this disallowance based on the past record of the assessee. The assessee's counsel could not refute the findings of the authorities. Consequently, the Appellate Tribunal found no grounds to overturn the decision regarding the disallowance of travelling expenses.

In conclusion, the appeal was partially successful, with the Appellate Tribunal allowing the bad debt claim for one specific party while upholding the disallowance of a portion of the travelling expenses.