9911796707
TMI Blog1936 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case are briefly these. In April 1920, when the assessee was a minor, his property was under the management of his guardian and mother Lady Sulochana. She desired to start a new Cotton Spinning and Weaving Mill about that time and for that purpose entered into negotiations with one Mr. W.L. Holland of Preston, England, to purchase certain machinery from him. Disputes, however, subsequently arose between her and Mr. Holland as to whether there was any binding contract to purchase the machinery. While these disputes were going on, Mr. Holland came to Bombay and advertised the machinery for sale and about September 1921, a purchaser was found, viz. the Agra Spinning and Weaving Co. Ltd., hereinafter referred to as the Agra Mills. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the money required by the Agra Mills to purchase the said machinery. This Company had, however, as a matter of fact, no money of its own and the money actually utilised was that belonging to the assessee who has then, as stated above, a minor under the guardianship of Lady Sulochana and who had a very large amount of money deposited with the Ahmedabad Company at interest. When that money was found insufficient for the said purpose, a loan of ₹ 5,00,000 was raised by Lady Sulochana from the Imperial Bank of India Ltd., in April 1923 by depositing War bonds belonging to the minor's estate. By the above tripartite agreement, the Agra Mills agreed to issue 8 per cent. mortgage debentures, repayable in 8 years, as security for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter making sundry adjustments, found to be ₹ 8,58,710 and it was written off by him in his accounts for the Hindu Samvat year 1988. When the Income Tax Officer, C Division, Ahmedabad, started income-tax proceedings for the purpose of assessment for the financial year 1933-34 (ended on 31st March 1934) the above loss of ₹ 8,58,710 written off as aforesaid in the accounts of the assessee for the Samvat year 1988 (being the previous year for the purpose of the said assessment) was claimed by him as a set off against his income from other sources. The assessee's contention was that the said debenture transaction was nothing but part of his money lending business in which money advanced as a loan had been lost. The Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y document, it has not been printed along with this Reference. A copy of the form in which the debentures were issued is annexed hereto marked Ex. E. 5. Questions for the decision of the High Court: I submit the following question for your Lordships' decision: Whether under any provision in the Income Tax Act, XI of 1922, the loss of ₹ 8,58,710 suffered by the assessee on account of money invested in debentures issued by the Agra Spinning and Weaving Co. Ltd., and lost when that company was wound up can, for the purposes of S. 24(1) of the Act, be treated as 'a loss of profits or gains ' under any of the heads of income in S. 6 of the Act and set off against the income of the assessee under any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is a section dealing specifically with this particular head, no other section of the Act can be applied. 8. As there is no provision whatever in the Act to allow any such loss of money invested in securities, be they Government loans or debentures of a company, the said loss cannot be allowed and I submit the answer to the question should be in the negative. 9. A copy of your Lordships' decision may kindly be certified to me for further action as required by S. 66(5) of the Act. Sir J.S. Kanga and Petigara with Messrs. Mulla and Mulla for the Assessee. The Advocate-General with the Government Solicitor, for the Commissioner. Sir J. S. Kanga and Petigara with Messrs. Mulla and Mulla for the Assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., in order to enable them to purchase certain machinery which the assessee's mother had herself originally agreed to purchase. There is nothing whatever to show that the debentures were taken as part of money-lending transactions, and in any case, as I have said, we are bound by the finding of fact that they were not taken as part of money-lending transactions. It cannot seriously be contended that if a man has a business of money-lending, then every single transaction which he enters into, which involves the lending of money must be taken as part of the money-lending business. It is plain that a money-lender, like other people, may invest his capital or accumulated profits in forms of investment which are in law loans, e.g., Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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