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TMI Blog1987 (4) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal was correct in holding that the debt of Rs. 41,000 became bad during the period relevant to the assessment year 1962-63 ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the amount of Rs. 72,000 received as compensation for the two Simla properties was not liable to tax in the assessment year 1962-63 ? " These references relate to the assessment year 1962-63. In Taxation Case Reference No. 62 of 1977, the reference is at the instance of the assessee in which questions Nos. (1) to (3), referred to above, have been referred, whereas in Taxation Case References Nos. 63 and 64 of 1977, the reference has been made at the instance of the Revenue in which questions Nos. (4) and (5) have been referred. A consolidated statement of the case has been forwarded to us by the Income-tax Appellate Tribunal, Patna Bench, Patna (hereinafter referred to as the Tribunal") The relevant facts for answering questions Nos. (1) to (3), i.e., in the assessee's reference are that on June 30, 1930, the assessee advanced a sum of Rs. 17,00,000 to one Shri Bhubneshwar Prasad Narain Singh of Madhubani who executed a zarpeshgi lease with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hgi lease was agricultural income and not income from money-lending business as the property in question was an agricultural one. Therefore, he could not claim the aforesaid sum as a bad debt incurred in a money-lending transaction. The Income-tax Officer further came to the conclusion that the loss in question could not have been claimed in this assessment year as the accounting year relevant to the assessment year in question ended on March 31, 1962, and thereafter only compensation has been fixed by the Compensation Officer by his order dated November 28, 1963. On appeal being preferred, the Appellate Assistant Commissioner of Income-tax upheld the rejection and the Tribunal also approved the same. Hence, this reference. The question to be considered for answering this reference is whether payment made to the lessor was premium or the same was a loan. If it is held that the payment was a premium and not a loan, the income being agricultural from the leasehold properties, was not assessable and, therefore, the loss accrued therefrom cannot be claimed under the Act. But if it is held that the payment to the lessor was a loan, the income is from money-lending business and if in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded by the aforesaid decisions of this court as well as the Supreme Court and the Tribunal was quite correct in holding that the claim of the assessee was rightly rejected by the Income-tax Officer and upheld by the Appellate Assistant Commissioner. In view of the fact that questions Nos. (1) and (2) are being answered against the assessee, it is not necessary to answer question No. (3) referred to this court as once it is held that the loss did not accrue on account of money-lending transaction, the same cannot be claimed as a bad debt under the provisions of the Act. Therefore, it is not necessary to decide as to in which assessment year the, same could have been claimed. Now, I proceed to decide the departmental references and the necessary facts for deciding question No. (4) are that the assessee obtained a decree for Rs. 41,000 and the decretal dues were to be paid in instalments. The judgment-debtor failed to pay the instalment which was due on June 23, 1949, whereafter, for realisation of the decretal dues, execution was levied, but, in the meanwhile, the estate of the judgment-debtor vested in the State of Bihar under the provisions of the Land Reforms Act, whereafter t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see on the aforesaid ground, it cannot be necessarily said that the debt became bad in the year 1980. If the judgement-debtor acquires property in the year 1981-82, the assessee could file an execution case till the year 1982, i.e., well within the period of 12 years from the date of passing of the decree and realise his decretal dues from the properties acquired by the judgment-debtor either in the year 1981 or 1982 and the debt cannot be said to be a bad one in the year 1980 when the execution of the assessee was dismissed on the ground that the execution was dismissed in view of the fact that the judgment-debtor had no property out of which the decretal dues could have been realised. Thus, it may be stated that a debt may become bad when the remedy for recovery thereof becomes barred. The instances which I have given are only illustrative and not exhaustive. There may be certain other considerations for holding as to when a debt becomes barred. In the case on hand, the execution was finally dismissed by the High Court on September 1, 1959, but the assessee thereafter could have levied fresh execution by June 23, 1961. If the judgment-debtor could have acquired the property betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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