Law:

Section:

Section 256 of the Income-tax Act, 1961 - Reference - Question of fact - Assessee's claim that certain amount was bad debt, disallowed by ITO and AAC, was allowed by Tribunal, which held that having regard to circumstances of debtor, it had become difficult or impossible for assessee to recover impugned amount - Whether any question of law arose from order of Tribunal - Held, on facts, no Facts During the accounting year relevant to the assessment year 1970-71, the assessee effected sales to a certain cotton mill to the tune of about Rs. 3 lakhs but was able to recover only an amount of about Rs. 2 lakhs from it. The assessee tried its level best to realise the remaining amount but in vain. Ultimately, the cotton mill was taken over as a sick unit miner the Sick Textile Undertakings (Nationalisation) Act, 1974. In the assessment year 1971-72, the assessee claimed deduction of Rs. 75,000 as a bad debt out of the amount outstanding against the debtor cotton mill but the ITO and, on appeal, the AAC disallowed the assessee's claim. On second appeal, the Tribunal, however, allowed the assessee's claim and also rejected the revenue's reference application under section 256(1) of the Income-tax Act. On application under section 256(2) : Held In the instant case, the Tribunal had recorded a finding, on consideration of the facts on record, that it had become difficult or impossible for the assessee to recover the impugned sum of Rs. 75,000. Consequently, no question of law arose from the order of the Tribunal. The reference application was, therefore, dismissed. Ashok Bhan and Ajay Mittal for the Applicant. B.S. Gupta for the Respondent. JUDGMENT Mital, J.-Ganpat Rai Banarsi Dass (hereinafter called 'the assessee') had business dealings with Laxmi Narain Cotton Mills Ltd., Calcutta. During the assessment year 1970-71, the assessee effected sales to the cotton mills to the tune of Rs. 2,91,748. Out of the sale price, Rs. 1,97,372 had been paid through cheques by the cotton mills on various dates between 23-4-1969 to 4-11-1969. Out of the cheques one cheque of Rs. 12,000 was dishonoured with the result that Rs. 1,06,375 were recoverable by the assessee from the cotton…

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