Law: Income Tax Act, 1922

Section: 10,10(2)(xi)

[Income Tax Act, 1922 (XI of 1922)]........Section 10(2)(xi)--Bad debt Burden of proof that debt is irrecoverable Whether on the assessee - Held Yves-Debt becoming time barred- Whether necessarily becomes irrecoverable-Held no-Whether depends on estimate of facts and circumstances of each case-Held yes - The system of accounting maintained permits reversal of entries in the Bad Debt Account in the event of unexpected realisation-Whether makes the entries provisional and claim liable to be rejected-Held no. case referred to :- B. C. G. A, (Punjab) Ltd. v. Commissioner of Income-tax, (1937) A. I. R. 338 Lah. B. Income Tax Act, 1922 (XI of 1922)-Section 66 -Reference to High Court-Power of the High Court to reset the question- Question formulated not bringing out the real controversies between the parties-Whether High Court empowered to reset the question Held yes. Case referred to :- Octavious Steel & Co. Ltd, v. Commissioner of Income-tax, Dacca (P.L.D. 1960 371 ; (1960) 2 TAX 85(S.C.). JUDGMENT [The judgment of the Court was delivered by Dorab Patel, J.]-The respondent is a bank, and the loans advanced by banks have often to be written off as bad debts; therefore, in the assessment year 1961-62 to the assessment year 1965-66 the respondent claimed to have written oil bad is true, but learned counsel had to show that the circular was contrary to the provisions of Section 10(2) (xi) of the said Act. Therefore, in order to appreciate Mr. S. A. Nusrats reply, I would point out here that, according to sub-section (1) of Section 10, Income-tax is payable by an assessee under the head "profits and gains of business " in respect of the profit, or, gains of any business carried On by him. sub-section (2) then re-prescribes that such profits or gains are to be computed after making the allowances prescribed in the sub-section and clause (10) of the sub-section, in so far as it is relevant, reads: "in the case of an assessee carrying on a banking or money-lending business. such sum in respect of loans m de in the ordinary course of such business as the Income Tax Officer may estimate to be irrecoverable, but not exceeding the amount actually written off as…

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