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TMI Blog1956 (8) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... as a broker for nine constituents, that these constituents had not discharged their liability, that he had paid on the Bullion Exchange the amounts due by them, and that in the year of account the debts due by these persons had become irrecoverable, and therefore he claimed the amounts as bad debts. The two questions which we asked the Tribunal to refer were: (1) Whether the sum of ₹ 1,90,841 represented debts, and, if so, they became bad or doubtful debts in the year of account? (2) In the alternative, whether the said sum of ₹ 1,90,841 was an allowable deduction as a loss under section 10(2)(xv) of the Indian Income-tax Act or as a loss incidental to the assessee's business? Mr. Palkhivala has strenuously argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal, it was strenuously urged by the assessee that these two constituents had given him instructions to put through the transactions, that he had acted as their broker, and that the loss suffered was the loss of the constituents and not his loss. It is difficult to understand how it is possible for Mr. Palkhivala now to urge before us that we should give him relief on the basis that these were his business losses and not losses of his constituents. Mr. Palkhivala says that it is open to him to set up alternative cases. An alternative case may be set up when two inferences are possible from the same set of facts, but it is difficult to understand how a party can put forward one set of facts and in the alternative a set of facts which are en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s urged that if this payment was not on behalf of the constituents the only other inference is that it was a payment on behalf of the assessee himself as representing his own losses. Now, as pointed out by the Tribunal, these are not the only two inferences that necessarily arise from the fact of payment by the assessee. A third inference is possible that this payment was made to the Bullion Exchange to be ultimately paid to a third party who may not be an independent third party but may be a benamidar of the assessee himself. Mr. Palkhivala countered this by saying that it was for the Department to establish that these losses were paid not to a genuine honest third party but to a benamidar of the assessee. It is difficult to understand why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In our opinion, the finding given by the Tribunal is a finding of fact and it is not open to us with the limited jurisdiction that we are exercising to go behind that finding. It is also our opinion that it is impossible to suggest that there was no material whatever for the finding given by the Tribunal, especially when it is remembered that the burden was upon the assessee and not upon the Department. But we do feel that there is considerable force in the grievance put forward by Mr. Palkhivala, and in putting forward that grievance he is not merely representing the cause of his own client but the cause of the business people in general. An honest businessman takes the view that a particular debt becomes irrecoverable in a particular y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that those debts became irrecoverable in some other year by reason of the provisions of the Income-tax Act. We strongly wish to urge upon the Government and the Taxing Authority the necessity of some provision in the law whereby it would be open to the Income-tax Officer, if the debt is held to be irrecoverable in a particular year, to permit a deduction in some later year in which the Income-tax Officer finds that the debt in fact became irrecoverable. As the position stands now, the Taxing Department is in this extremely happy position. All that they hold is that a debt becomes irrecoverable in a particular year, that is a finding of fact, that finding cannot be successfully assailed, and having come to that conclusion they can comfortabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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