Law:

Section:

Income tax---Bad debt Assess ability of bad debt on basis of mercantile system of accounting Not relevant Assessee advanced loan to sister-concern Loan very old and no interest on loan received by assessee¬-Assessee not charging interest after 1966 Suit filed against debtor pending disposal Debtor denying his liability in respect of debt No material to show that financial position of debtor was sound Interest or any part of loan not likely to be realized Tribunal's finding that principal amount had become bad and no interest had accrued to assessee in year, relevant to the assessment year 1969 70 Finding based on evidence on record Tribunal's finding justified. Binjraj Hukumchand A I R 1931 Cal. 683; C. I. T. v. Motor Credi, Co. P. Ltd. (1981) 127 I T R 572 ; C. I. T. v. Thiagaraja Chetty & Co. K. R. M. T. T.) (1953) 24 I T R 525 (S C) ; Soli Pestonji Majoo v. Ganga Dhar Khemka A I R 1969 S C 600 and State of M. P. v. Kathabhai Desaibhar Patel (1972) 29 S T C 104 ref. JUDGMENT SABYASACHI MUKHARJI, J. In this reference under section 256(2) of the Income tax Act, 1961, as directed by this Court, the following question has been referred to this Court by the Tribunal: "Whether, on the facts and in the circumstances pf the case, the Tribun4l is right in holding that Rs. 3,37,725 did not accrue by way of interest and loan advanced to Messrs Howrah Trading Company (P.) Ltd. and as such is not assessable in the year under consideration?" The present reference relates to the assessment year 1969 70. The assessee company had advanced certain loans to Messrs Howrah Trading Co. (P.) Ltd. which was a sister concern of the assessee company. The outstanding loan of this year was Rs. 71,10,000. The Income Tax Officer found that no interest was being shown on this loan. He further found that the assessee was following the mercantile system of accounting The Income Tax Officer, therefore, added Rs. 3,37,725 as interest at 4 °a on the above amount of loan. The assessee went up in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner followed the reasons given in the earlier year's order and deleted the amount of Rs. 3,37,725. In the earlier…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492