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TMI Blog1966 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... is Whether, on the facts and circumstances of the case, the sum of Rs. 10,55,025 due from Kunwar Ganesh Singh was allowable as a bad debt under section 10(2)(xi) of the Income-tax Act ?" It is not now disputed that the assessee succeeded to the money-lending business of his father within the meaning of section 26(2) of the Income-tax Act after the death of his father who was carrying on an extensive money-lending business. That question was settled by the decision of the Privy Council in Maharajadhiraj of Darbhanga v. Commissioner of Income-tax. The Maharajadhiraj of Darbhanga entered into an agreement with Kunwar Ganesh Singh for the purpose of opening a business under the name of Sadhashiva Vishwanath " at Calcutta mainly to carry on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Commissioner of Income-tax. The Appellate Tribunal treated a part of it, namely, Rs. 10,55,025, as a bad debt and allowed deduction in favour of the assessee. On that, the Commissioner of Income-tax asked for reference and obtained the statement of facts from the Tribunal. One of the questions raised in the order of the Appellate Assistant Commissioner which came up before the Tribunal was that the assessee had discontinued his business of money-lending and bad debt in question was not in relation to a business in his hands. It appears from the order of the Appellate Tribunal that a statement in regard to the advances in money-lending by the assessee, during the previous twelve years was filed before it, and from that it appeared, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to look to the nature of this advance with reference to the registered instrument that came into existence on the 30th April, 1925, between Kunwar Ganesh Singh and the assessee's father. That is why, with effect from that date, the Tribunal took the advance to be in the course of money-lending business as done by the assessee's father. It is well-known that the relationship of a different nature can be changed into the relationship of creditor and debtor if the parties agree to that. Money due from one to another on any other account may be converted into a loan advanced by one to the other. The Tribunal has referred to some decisions in this respect, and the view taken by it, in our opinion, was correct. In regard to the question whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance of the money-lending business in the hands of the assessee. As to whether it had already become a bad debt much earlier than the previous year, learned counsel urged that mere continuance of litigation in courts is not proof of the fact that the debt had not become unrealisable already. Nobody would indulge in expensive litigations or undertake the harassment of execution proceedings and transferring execution proceedings from one court to another in pursuit of realisation of one's debts if there was really no chance of recovery of anything. In the present case, even the amount of Rs. 10,000 was found to be realisable in 1956. Therefore, it cannot be said that this debt to the extent of Rs. 10,55,025 had already been discovered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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