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TMI Blog1971 (8) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... al time, was an undivided Hindu family carrying on money-lending business. In the course of that business the assessee lent Rs. 40,000 to one Sri Kishan and his brother in September, 1930. The transaction was one of simple mortgage of immovable properties and the interest was payable according to the terms of the mortgage. In September, 1933, the assessee purchased a portion of the mortgaged property for Rs. 35,000. Out of this amount a sum of Rs. 3,000 was adjusted against the mortgagor's share of the loss in a firm which was payable to the assessee. The balance of Rs. 32,000 was adjusted against the mortgage debt leaving a sum of Rs. 8,000 outstanding on the mortgage. Between the date of mortgage in September, 1930, and the date of sale t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sset the conclusion of the Tribunal was that the assessee considered the aforesaid asset as a part of his money-lending business. The decision having gone against the assessee the following question was sought to be referred and was duly referred by the Tribunal to the High Court : " Whether the sum of Rs. 52,313, realized in excess by the assessee on the sale of the property in the circumstances narrated above, constitute the profits and gains of the business of money-lending carried on by the assessee ? " The High Court took into consideration the circumstances which had been adverted to by the Tribunal. One of the prominent circumstances was that the assessee had paid the sum of Rs. 17,800 to the puisne mortgagees in order to safegua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived income which, being agricultural, was not chargeable to income-tax and that these facts showed that the investment was of a capital nature. The Tribunal based its decision mainly on two facts : the first was that the assessee had claimed and obtained an allowance as a bad debt of the sum of Rs. 4,763 mentioned before and the payment of a sum of Rs. 17,000 and odd to the mesne encumbrancers had been shown as a debit in the money-lending account. This is what the Tribunal proceeded to observe : " It is impossible now to allocate the sum of Rs. 4,763, written off as a bad debt between the various items which went up to make the total of Rs. 29,000 and odd due to the assessee and in respect of which he was able to secure a decree onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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