9911796707
TMI Blog1992 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee was entitled to deduction thereof on the ground that the amount had become irrecoverable as the party had become insolvent. The Wealth-tax Officer, however, did not accept the claim of the assessee and held that the debt had not become bad during the years in question and as such no deduction was admissible. The Commissioner of Wealth-tax (Appeals), before whom the order of the Wealth-tax Officer was challenged held, that since the assessee had not been able to recover the amount, the value of the debt had become " nil " during the years in question, i.e., assessment years 1971-72 to 1979-80. He, therefore, directed deduction of Rs. 4,50,000 in computing the net wealth of the assessee and partly allowed the appeal. The Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the debt of Rs. 4,50,000 at its face value and including it in the net wealth of the assessee ?" It was urged on behalf of the assessee by Mr. K. H.Kaji, the learned advocate appearing for the assessee, that there was ample material on record which clearly suggested that the debt in question would not have fetched any value if sold in the open market on the valuation date and, therefore, the decision of the Commissioner of Wealth-tax (Appeals) holding that the value of the debt had become " nil " during the year was correct. He submitted that for the purpose of claiming deduction on the ground that the asset would have no value as envisaged in section 7 of the said Act, as was applicable during the relevant years, it was not essential for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... informed the creditor that he was not in a position to pay any amount and that he would not be paying the same in the foreseeable future. The language used in this letter clearly shows that the debtor had informed the creditor that he had, suspended the payment of the amount which was due to the creditor. Even the reply which was sent by the creditor on March 15, 1972, in response to the said letter, a copy of which is on record, clearly shows that the creditor had understood that he was required to wait indefinitely. The genuineness of this correspondence is not at all disputed and what transpires therefrom is that the debtor showed his inability to repay the amount in no uncertain terms. He had incurred heavy financial losses starting fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said debt could not be brought down to "nil" is unreasonable and given without considering the contents of the correspondence which clearly indicated that the said asset would have no value on the relevant valuation date, having regard to the stand taken by the debtor. The subsequent events that took place clearly justified such conclusion. Admittedly, insolvency proceedings were instituted against the debtor on October 24, 1975, and the debtor was adjudged insolvent by the High Court of Bombay by its order dated July 6, 1976. There is no dispute about the fact that even prior to the institution of the insolvency proceedings, the assessee was not able to recover any amount and there was no possibility of any recovery having regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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