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TMI Blog1970 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ing M/s. Hukam Chand Raj Kumar, Amritsar. The main business of this firm was money-lending. Its partners were Harjasmal (assessee), M/s. Yograj Dev Raj and Smt. Indira Vati. A Surat firm known as M/s. Harjas Rai and Co. were debtors of Messrs. Hukam Chand Raj Kumar, the Amritsar firm. Their debt liability to this firm was to the tune of Rs. 1,50,705. The firm was dissolved on 20th March, 1954. The assets and liabilities of the Amritsar firm were taken over by the assessee, Harjasrai Mehra, on Chet Bedi, 2010. In an award, as a result of arbitration proceedings, the liability of the Surat firm was liquidated on payment of Rs. 40,000. In the assessment year 1954-55, relating to the financial year 1953-54, the assessee claimed a sum of Rs. 1,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver by the appellant. The appellant recovered a sum of Rs. 40,000 only and the balance of Rs. 1, 10,704 was claimed as a business loss. The loss in question is definitely not a business loss. It is a capital loss. The amount claimed as a loss did not accrue or arise to the appellant during the course of his day to day business activities. It is not all kinds of losses that are to be considered for set-off. The Income-tax Officer rightly disallowed the claim of the appellant. " Against this decision the assessee took up the matter to the Income-tax Appellate Tribunal, Delhi Bench. The Appellate Tribunal came to the conclusion that a remand report was called for. The reasons for this remand are to be found in the following order of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Commissioner will permit the assessee to lead whatever evidence he likes in support of his contentions. The Appellate Assistant Commissioner after recording the evidence in this case should submit the remand report within three months from the date of receipt of this order. " The Appellate Assistant Commissioner in his report observed : " By the time the appellant took over the assets and liabilities of the money-lending business of the firm, it had already been closed and that the appellant thereafter did not carry on any money-lending business. He merely confined his activities to the realization of sundry debtors and payments to sundry creditors. Any loss resulting out of it purely was a capital gain or loss. It may be mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. This led the department to move this court by an application under section 66(2) of the Act. This court allowed the application and directed the Tribunal to refer the following two questions of law for its opinion along with the statement of the case : " 1. Whether, on the facts and circumstances of the case, there was any material on the record to hold that the assessee carried on moneylending business during the year of account ? and 2. Whether, on the facts and circumstances of the case, the amount of Rs. 1,10,705 was not rightly allowed as bad debt in computing the income of the assessee ? " So far as the statement of the case is concerned, reference need only be made to paragraph 6 which is reproduced below : " The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on money-lending business and that the assessee, Harjasmal Mehra was not carrying on any money-lending business. The main dispute, according to the assessee's counsel, is that Harjasmal Mehra started carrying on the money-lending business as soon as he took over the assets and liabilities of the Amritsar firm on its dissolution on the 20th March, 1954, whereas, according to the counsel for the department, there is no evidence that the assessee carried on the money-lending business of the Amritsar firm after its dissolution. The department's case throughout has been that the moneylending business came to an end with the dissolution of the Amritsar firm and what the assessee was doing was merely realising the assets and paying off the liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ources at Rs. 50,000 relying merely upon the offer made by the counsel for the assessee. On a reference, the High Court held that the judgment of the Tribunal was based on no reasoning and was on that account speculative. On appeal to the Supreme Court it was held : " ....... that the method adopted by the Appellate Tribunal was an unsatisfactory way of disposing of the appeal before it and the order passed by the Tribunal without recording any reasons in support of its estimate could not be sustained. " After recording this finding, certain directions were given by their Lordships to the Tribunal to dispose of the appeal on the merits after hearing both the parties. These observations fully apply to the facts of the present case. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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