9911796707
TMI Blog1995 (11) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the amount of ₹ 8,552 being the unrealisable rent against the rent due as deductible against the business income treating the name as business debt ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in treating the law charges of ₹ 20,670 as business expenditure and in that view allowing deduction against business income? 2. Shortly stated the facts are that the assessee Karnani Finance Enterprises Ltd. for the assessment year 1983-84 corresponding to the accounting year ended on 31-3-1983 claimed bad debts of ₹ 85,510 in respect of M.V. Law Co. (P.) Ltd. and & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een sold to a third party and as a result the rent could not be realised and it was, therefore, a bad debt. The ITO, however, did not allow the assessee's claim on the ground that the amount of ₹ 8,552 related to rental income from property at Asansol, which was sold and the amount represented unrealised rent against the rental income, which could not be regarded as a bad debt deductible against the business income or even property income. Against these two disallowances, the assessee filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) held that the amount of ₹ 85,510 represented a bad debt forgone by the assessee for valid business consideration and it should be allowed as a business loss. As regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude the arrear of rent from the tenant. 5. So far as the legal expenses are concerned that was allowed by the Commissioner (Appeals) and the Tribunal in the assessee's own case for the assessment years 1970-71 and 1971-72 and that it is stated by Mr. Poddar, the learned counsel appearing on behalf of the assessee that no reference has been taken against the allowance of the legal charges in respect of those years. 6. Mr. Poddar, the learned counsel appearing for the assessee contended that the department cannot insist on demonstrative proof of the fact which must satisfy the test of infallibility. All that is required is an honest judgment on the part of the assessee at the time when he makes write-off. In the instant case, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary view and the Commissioner (Appeals) as well as the Tribunal could not hold to the contrary. 8. So far as the legal expenses are concerned in the earlier years such question arose but no reference has been taken out. So far as the first point is concerned reference was made to the decision of the Bombay High Court in the case of Jethabhai Hirji Jethabhai Ramdas v. CIT [1979] 120 ITR 792 wherein the Bombay High Court held that department cannot insist on demonstrative proof of the fact which must satisfy the test of infallibility. All that is required is an honest judgment on the part of the assessee at the time when he makes the write off. A debt cannot be written off as bad and irrecoverable if on the material available it could ..... X X X X Extracts X X X X X X X X Extracts X X X X
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