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TMI Blog1961 (10) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... ee thousand one hundred and sixty-two) which was claimed as a bad and irrecoverable debt ? 2. Whether on the facts of the case the debt of ₹ 2,23,162 (rupees two lakhs twenty-three thousand one hundred and sixty-two) became in law a bad debt in S. Y. 2004 ? 3. We are here concerned with the assessment year 1949-50, relevant account year being S. Y. 2004, i.e., the period November 13, 1947, to November 1, 1948. The assessee is a partnership firm, carrying on extensive forward business in several commodities including bullion. The forward business in gold and silver is carried under the name and style of Messrs. Jaswantlal Jadavji (Chamber Department). That business is conducted in conformity with the rules and regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere due after 360 days, that is, the money of the two hundies became payable after the close of S. Y. 2004. The assessee gave credit for the entire amount of ₹ 3,00,000 and ascertained the balance due from the debtor at the end of the year at ₹ 2,23,162-8-0 in the computation of his income under section 10(2) (xi) of the Act. The Income Tax Officer did not accept this claim of the assessee. In his opinion the debt had not become bad in the year of account. He based his conclusion on the facts that tough the debtor had debit balances in the other department of the assessee, those debit balances were carried forward and were not written off as was done in respect of the debtor's loss in the bullion transaction (Chamber Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hai, through whom the transaction of the debtor had been effected. The assessee took a second appeal to the Tribunal and the Tribunal has, agreeing with the views of the Income Tax authorities, dismissed the assessee's appeal. The application made by the assessee under sub-section (1) of section 66 also was dismissed by the Tribunal. As already stated, on a requisition by this court, the aforesaid two questions have been referred to us. 4. In our opinion the first question does not arise out of the order of the Tribunal. It has not been held that at no point of time the debt became bad or irrecoverable. The ground on which the claim of the assessee had been rejected is that the debt did not become bad in the relevant S. Y. 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his court in Raja Bahadur Mukundlal Bansilal v. Commissioner of Income Tax, has held that a debt becomes a bad debt when the creditor has no reasonable expectations of recovering it from the debtor or when there is no ray of hope at all on which the creditor can rely for recovering the amount from his debtor. In the decision, to which our attention has been drawn by Mr. Kolah, the position is stated thus : The expression 'bad and doubtful debts' in section 10(2) (xi) does not contemplate two kinds of debts, but refers to the same class of debt, namely, a debt which is bad and doubtful, i.e., a debt, of which the chance of recovery is nil or slender. A doubtful debt does not mean a debt which cannot be held to be irrecovera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... future. This being, inter alia, the material on the record before the Tribunal, it cannot be said that the Tribunal as not justified in holding that the debt had not become a bad debt in S. Y. 2004. In this view of this matter, the answer to the second question will have to be returned in the negative. 8. Before parting with the case, we would refer to another decision of this court in Karamsey Govindji v. Commissioner of Income Tax referred to us by Mr. Kolah. The decision itself had hardly any application to the facts of the present case. However, we would like to reiterate the following observations therein made by the learned Chief Justice : As we had occasion to point out before, the present Income Tax law with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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