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TMI Blog1994 (7) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee as a business loss for the amount charged by the principals is not allowable as loss incidental to the business of the assessee?" The brief facts of the case are that the assessee is assessed as an individual and derives income from commission. During the course of the assessment proceedings in respect of the period ending Diwali, 1979, the Income-tax Officer found that a sum of Rs. 52,758 has been claimed as a bad debt. The assessee has filed the list. The statement of the proprietor, Shri Mohandass, was recorded and he stated that he is the sole-selling agent of Messrs. Atma Ram and Sons, Jodhpur, and has earned income by way of commission for a sum of Rs. 50,990. There was an employee by the name of Kishan Chand with At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, it was held that the claim of the appellant has to be allowed as it arises in the normal course of business. The Revenue challenged in appeal the order of the Appellate Assistant Commissioner, where it was contended that the assessee is the agent and gets the commission at one per cent. from Atma Ram and Sons and Kishan Chand was an employee of Atma Ram and Sons. Therefore, it was not a case of bad debt at all. Alternatively, it was submitted that it was not a case of business trading loss by the assessee but, at best, it could be a trading loss in the hands of the employer, namely, Messrs. Atma Ram and Sons and the agent has nothing to do with it. The Income-tax Appellate Tribunal found that Kishan Chand used to collect amounts on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as authorised to collect the money on behalf of Atma Ram and Sons, then the liability of the assessee in accordance with the agreement stands discharged. Since Atma Ram and Sons has not asked the assessee to pay the amount in dispute, it cannot be claimed as a trading loss at all. In respect of the question as to whether the assessee was entitled to claim it as a bad debt, it was found by the Tribunal that the relationship as a creditor and debtor has not been established. The assessee was not a debtor. Atma Ram and Sons was a creditor and, as such, the amount cannot be claimed by the assessee as a bad debt. The relationship between the assessee and Kishan Chand can also not be considered as a creditor and debtor and on that ground also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the payment and, therefore, it cannot be considered to be a bad debt. So far as the relationship of the assessee and Kishan Chand is concerned, neither the assessee was a creditor at any point of time nor Kishan Chand was a debtor, and, as such, the first necessary element for claiming the amount as a bad debt is not existing besides the other requirements of law. The assessee was given the opportunity to produce Kishan Chand or to furnish his address. There was complete failure on the part of the assessee to produce Shri Kishan Chand and, therefore, the correct facts which could have come otherwise have not come on record. The assessee has also failed to produce any evidence by which it could have been proved that even Messrs. Atma Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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