Law:

Section:

Section 256 of the Income-tax Act, 1961 - High Court - Reference to - Whether it is duty of Tribunal to draw up proper statement of case containing detailed statement of facts, as also including in paper book all essential document on basis of which it rendered its decision - Held, yes. - Whether where some of important documents referred to by Tribunal in its appellate order did not form part of statement of case nor were they included in paper book, questions referred to High Court could not be answered - Held, yes FACTS The assessee, a non-resident company, was running a tea plantation and carrying on business of manufacturing and sale of tea. It entered into an agreement with one 'A' for the sale of the estate and the business of the assessee. Thereafter, it entered into an agreement with to sell the entire tea manufactured up to a particular date. For the sale of the estate, permission of the Reserve Bank of India was required but it was refused. Meanwhile a sum became due to the assessee-company from 'C', towards cost of tea supplied to it. Disputes arose with regard to this amount and the assessee referred the same to the arbitration. While the matter was still pending, the RBI granted permission for the sale of the estate. In pursuance thereof, the entire estate along with its assets and liabilities was sold to a running concern of a Bombay company. A day prior thereto, the entire amount due to the assessee from 'C' was written off as a 'bad debt'. During the course of the assessment for the year 1977-78, the said sum was claimed as a business loss, or at any rate, a bad debt. The ITO rejected the plea. The Commissioner(Appeals) reduced the total income holding that it was a 'business loss' consequent on the sale of stock-in-trade and consumable goods in store. On cross appeals, the Tribunal affirmed the decision of the Commissioner (Appeals). It was held that the sum reduced by the Commissioner (Appeals) was an admissible deduction, since it was a loss on the sale of the current assets. On reference: HELD In answering the questions referred to the High Court, the High Court exercises only an advisory jurisdiction. If the questions referred are academic…

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