9911796707
TMI Blog1989 (4) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting the requirements of the Government or of any Corporation or of any local authority or of any class of persons having regard to the nature of the regions and direct the manufacturer i.e. the assessee to distribute the tractors manufactured or kept by him for sale in such regions through such dealers, in such number and manner and at such times as may be specified in the Order. The Central Government has prohibited a manufacturer of tractors after the commencement of that Order to sell or otherwise dispose of any tractor except in accordance with the Order made by the Controller and various regulatory provisions were made in that Order, which includes the appointment of dealers and the relationship with the manufacturer and the ultima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as organised under the Chairmanship of the Joint Secretary, Department of Heavy Industries, Ministry of Industrial Development,New DelhiinDelhito consider these cases of collection of unauthorised advances by the dealer, which was regarded as misappropriation of money. The Minutes pointed out that the Department of Industries, Government of India, took cognizance of these happenings and the fact that the said Shri Upadhyay had taken advance payments of varying amounts from the farmers against future supply of tractors, that some farmers made full payments and some made part payments, that the said Shri Upadhyay misappropriated the funds and considering the plight of the poor farmers, the matter was taken up with the assessee, who looking to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was written off as a bad debt and was claimed as a deduction in the assessment year under appeal. 3. The IAC disallowed this claim on the ground that the dealer Shri Upadhyay, who was appointed by the assessee, could not have acted contrary to the instructions of the assessee and in any case, there was no evidence to establish to the contrary. Further the assessee though filed a suit for the recovery of this sum in Delhi High Court, did not pursue it. Therefore the amount of Rs. 2,89,939 did not become either a bad debt or a loss to the assessee-company. He therefore disallowed it. 4. Against this disallowance, the assessee filed an appeal before the CIT(A). The CIT(A) confirmed the disallowance after referring to the entire gamut of fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition whereby the assessee was under no choice except to accept what was directed to it by the Government, presumably perhaps under the Tractors Control Order. It was on account of the pressure that was brought upon the assessee that the assessee agreed to treat the advances made by the farmers to Shri Upadhyay as advances made towards sale price of the tractors to be supplied by it, to the farmers, meaning impliedly that the amount paid to Shri Upadhyay was the amount paid to the assessee-company whether authorised or unauthorised. The Minutes prepared on 11th June, 1976 unequivocally states and unequivocally endorses the fact that the money was unauthorisedly collected by Shri Upadhyay from the farmers and was misappropriated by him. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds support to the view that the assessee but for the intervention of the Governmental Authorities would not have supplied the tractors to the farmers by treating the advances made by them to the dealer as if it was advancing the same amount of money by way of fresh loan to the farmers although no money was involved. The farmers did obtain decrees as we have mentioned above, but they could not be executed against the dealer because of his insolvency in the meantime. The assessee was thus left with no other alternative except to proceed against the guarantors or against the Government. The guarantor also had no asset. Therefore the last option left to it was to proceed against the Government for the recovery of the amount. It accordingly fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o shift the liability to pay the sum from the dealer to the Government of India. He therefore advised that it would not be worthwhile for the assessee to pursue its claim in the Delhi High Court as that would amount spending lots of money against indefensible suits. He also advised that it was not possible for the assessee to obtain decrees against the farmers because they have already obtained decrees against Shri Upadhyay for the same amount and the amount was so inter-twined and interlinked with the amount collected by Shri Upadhyay that it would be highly unlikely for any Court to pass another decree against the farmers. On the basis of this legal advice a decision was taken by the assessee to write off these amounts. This event had tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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