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TMI Blog2006 (7) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... and acted perversely taking into consideration that the goods did not belong to the assessee and that there is no amount due to the assessee particularly when the claim of the assessee was that the freight due has become bad and written off as evidenced by pages 50 and 51 of the paper book? 3. Whether or not the Tribunal was right in holding that the three items of bad debt in aggregate to Rs. 44,527 is not an allowable deduction as a bad debt without considering each item on its merits about irrecoverability like period of pendency difficulty for initiation of legal proceedings and other similar matters but only on a rule of thumb that amounts about Rs. 3,000 are not bad debt? 4. Whether or not the Tribunal was right in law in disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aggregate of other bad debts and Rs.73,996 being the interest payable to the financier on account of purchases of motor vehicles. The Tribunal rejected the claims except bad debts to the extent of Rs. 23,024 made up of various debts each being below Rs. 3,000. According to the assessee, the reasonings for the disallowance are flimsy, perverse and contrary to the provisions of the Income-tax Act, 1961. The assessee had claimed freight charges which had gone into the computation of the earlier years and had become irrecoverable because of the refusal by the customer to pay the freight due to the assessee on account of the pending claim for damages by the customer. The assessee has also stated that the Tribunal has committed an error in dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accounts. Further, the assessee had also claimed that the deduction could be allowed as a bad debt under section 36 of the Income-tax Act. According to the assessee, on account of damage caused to the goods the assessee could not recover the sum of Rs. 1,06,978 from KSDC and in that sense there was a bad debt allowance under section 36(2). The stand of the Revenue is that the assessee was not entitled to claim the deduction either as a trading loss or as a bad debt for the assessment year 1988-89. The Revenue placed considerable reliance on the report of the auditor. It was stated that the loss was incurred in the year 1983 and the matter was settled and the remaining goods were taken back in 1986. It was pointed out by the Revenue tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal had gone through the list of the parties against whom the debts were written off. The Tribunal had noticed that there are only three amounts totalling Rs. 21,503 and had felt that a direction be given to the Assessing Officer to allow the deduction for the bad debts below Rs. 3,000 in each case. As regards the balance amount of Rs. 21,503 the Tribunal sustained the disallowance. We find no reason to take a different view. First of all, the question as to whether a debt had become bad or the point of time when it became bad are essentially questions of fact and this court in this appeal is not justified in giving any direction to the Assessing Officer. Under such circumstance we answer an the questions in favour of the Revenue and ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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