1946 (2) TMI 10

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..... le the Chief Justice.) The assessee is a Nattukottai Chetti who at all material times was carrying on a money-lending business in Rangoon. He guaranteed a loan granted by a bank in Rangoon to the Chettiar firm of S.A.RM. and as the loan was not repaid by the borrower, he was called upon to make good the amount, ₹ 19,670, under his agreement of guarantee. The assessee sought to deduct this .....

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..... on the guarantee of others and in turn stood surety for other Chettiars. In these circumstances, the Tribunal considered that the sum of ₹ 19,670 which the assessee was called upon to pay fell under Section 10(2)(xii), that is, it was an expenditure (not being in the nature of capital expenditure or personal expenses), laid out or expended wholly and exclusively for the purpose of his busin .....

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..... bts had to be deducted in order to arrive at the true figure of the profits earned. The sum of ₹ 19,670 represented a loss incurred by the assessee in carrying on his money-lending business and therefore he was entitled to the deduction. By reason of the practice among Nattukottai Chettiars to which we have referred this debt can only be regarded as a business loss. We answer the question .....

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