Karnataka High Court
The Commissioner Of Income Tax vs M/S United Breweries Ltd on 11 January, 2010
Bench: D.V.Shylendra Kumar, N.Ananda
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(05)(C4) (es) If) To search fay; inspect; examine, V ' drilling and other prospective eperfitioiae, . _ geological and geephysioa;£'sazrveys _to p.+z_3ve' I A and estimate reserves: cf :_~ take on lease, purchase, éonstruege 'e.rect\. ' and commission, h:Tz"e,.._ ehafteij pw::hc3.se,_Vor lease 0:} drilling rigs*Qf';7lag"orms ether works and conz2enier;i::e,s -euitab%e_ vforvviithe Pu 6' _ _ .. ..
To carry on the AV producers, refiners; stere;'s," eC2;?'£d fiistributors of pezrééeiem __;z;2;reduct.s in all To zgp, :n'mZnfézin,VVm£znage and contra}! {ail ;rig.s- or platforms whether c.3j_7'shOr'é§j' and everything z}1cidentc;l"Qr "the exploration, search, dezzeiQpmen"t,_ "prjeductwn, transport, refinirag and @ui3itior2 of soiid, Ziquid and hydr(>4<':eg"jbe»n and their preducts (cw) otherwise acquire cezd were shz'p3'j_a.zid vessels efany eéaes, and to estczbiish maintain fines or reguiar eer'ez7z;es';ef ships or other vessets and as shéeouxrzers, and the business of of previfiing rnaréne _' 'services covering marine transportattlen, cgfshem engirteerzktg, inciuding insfailations repairs of plaftfemzs, chartering of veseels, rigs, tewages, pflft operatfens, saivage and underwater services} and to enter inie contrasts fer the carriage of mail} €§§2§"§ fififiéfififi" $21/fi'ie,Q§'éai%"E".»??§%»93s §*'3§§Z%%"% iififiéifififl 12 answering devices, radio , miczrophones, computer rack pnirzted circuits, microswitchss " ' -. ' trimmers, inciuding computers, ci*:$i72;fi;;:.té'r, V peripherals, computer scfiwqre, -d'i'::-c,.__, "
floppy discs and dis'r£et*i*35;" zest . and measuring irzsbuments, ,_rnateri;;:5§3A . ,' jbr electntmics, equ'z;:1;ner;t,'~.¢é}:itr0Z "
instrumentation ' professional electronic3..é2;*tci'~-.commi,mim::£ion eqltipnwnt. ' " ' " -. .
(c-11)To act eons.I.dtcanrs_ advice, services, fields of _ _ ""'"management casfisuiiaiicy, , and electrical 3 computer and "¢b:'r.,t.Jil.ter"?jsofi~:;)are, pt';lln:tion cxmtroi, 011 explore2tiari"m®d,"ma£erial handiing systems 'rams: any"b:.:,sfnss,5 ..--which the Company is e??.,t,ifl\'63z3l to "cm.
(<12-I 2).:§"'z2'V ozmy c'ir2V.V.,t;h.e fiusmess of manufacturers, H W Wm WM; W Wmmmm Wm swam' W mmsmm W . __ii'rq:2art(~31j'S, expbfiérs and to sell and deal in . _c:£;1g,gs, phannaceutimls, bulk drugs, V' rra9.di:;ir;=és, 'jbiolagicals, industrial prsducts, "and petra-chemicals of all types A»..,,iztcIz;,ci£i;gA fnarganic and organic chemicais and photographic chemicais, man = mad-2? }%res and films, petroleum and ~. A ' 'petroleum produms, soaps, casnzetias and tsiist preparations and all kinds of medical and stcrdfil appliances including electriwl, chemicai, photographicai and scientific apparatus and materials. "' V Hmééfi fif.f€§§g§";'%Z<?'"Z«f"
IJILAIIAI »...~«.u «Aww;«Wmwas wfivfi xlmwwwvnuwm-"m%x"mm%e**'& aawxwm wwwm we Wmfiwfléflflflkfl Hwefi mflwtétf wt" Kt5a%N&"§"&W& ?~§§€.§%x§'§ é';3%§i?.§m-" fits'? %&§§:t'»é$§'W%'"20
Whether the Tnibunai was correct in L' it that a sum cf R332. '?3 Lakhs paidffio M/SC Marine Products to export not supported by any ea'-ieéenoe could" btej', treated as expense Zaiiowaiaie, " tc'----. thee?' assesses under section the Ac::t--~asA. it was incurrect wholly and exeiusiwiy fcréthe purchase of its busizgees when ' the business activity 'aut_ by }the assessee is men;ufe:,~m;~e and of beer ~,f ' :~."a*.'a Whether the was etgyreet in holding that oj:'_Rs__e. .1..a:5.«.79 payabie by M/.33 f.fnterpri$_es%j be treated as arié irrecdvembfe--.e when the czssessee for supptying gebde _2:of'; ga7:Iy'»exchange of oomeepondence be£wee:1j'~-..the>'aesessee anct M/3. Sunny vEn--_terpr'_ise.fS Vnc3Ef«_i§mif*£at"ing any legat action to fe»::o"L~er the same:
Tribunai was correct in zzlliowing the essessee"s ctatm to treat the ~ ':2arr§e"ue mnounts claimed by it as bad debt ' v..,'e;2'd feitewed it as deduction under section 3~5{1}§vi£) when there was no proof for zrficzhg each. payment and there was no .. 7ej_7'a=rt to recover the debt ner an explanation given as to supervening impossibility on the part ef the debtor to pay.
Whether the Tfilovunai was mrreet thw came the assessee enters into an agreement ta etand guarantee and in the case of default each p@vments made would automatic.-:.1lIy be in the wurse of business, even though the party is a separate tegai entity mrrying Q//.
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letter dt, 2 1.3. 99 submitted as uneierf'--... ' -. * it was part Qf the pargrozw of the UB. Group. Atéflme sameiimefi when the joint venture canIe--.to end,' being UB1'. is ' eijare . "tax jibe' ' absorbed are the new oonggoariy enable --.to repay, owing re the lossesV.aor;u.muiate'djby it.
9° it is assumed that what: 'we gfteve, incziered. }- V above is a capital loss, i'we:."e7,ibfe.it .- same sheuld be set_Qfi' Vt;*34e"'¢_z1;9ito_Ll_ gain made by the ce*mp£:zny§'."_ V' "
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E E £3 e 52*' g The essessee did not evidence in support of their élefrn the ortgmai advance was a" Iadvariee. At the .same_. time, the PEEL hcisv-..?:2een_ chiming it: its Zet1fer'i%pat"'ét was advahee against the share'vr;ap;"te€.V Z{.'?fLe.eeeg;$ées of the {edger extracts fizmishede' E 31.. 1990-91 has the '{'entry cafe 'fiaiaitee fflreught Down. imerefdre, the fsef the PUL was debited' eairiier to that period The Original " A irfthe books at the time V. ---, ie,~,f gieizig edeezzee was net pmducaed iii
-- .fjepite" of the. szgfiwient epponunizy was given fie s:free"e;ésee company in suppcrf of their éietm Age ~~Pu--e:we 1 treat E3430. 7?, 633/?- eEe:in"1er.?. ,b3g=the assessee co' as or bad debt ef izaturefi which cannot be aiéowed as deduction u/$.35 er 3? of the wt Act.
W, '2m>'?E" é"x.§°*€hE%§'$1fi%IZg5'*3§%"3sfi?@e 51"'i!MmL5'{€'§ %.»*'re.4*?>i».z{?k'3i¢E '§w&_$8'"«VW#%Q€fiW%'%.>§.§'*%%% ?;"§§%§?W \V_ ,. .
opportunity to make their subnue this regard. The assessee "The point to be noted when the originezl czdvcmc:e¥._wa.s 'mvade,_ constituted a trade our eeeecs as f ":.¢«"<'v.\\.°°"«£».x'/7,V'5Y~s 3' Wm'? Lb'%.«2"\$¢,'Mt '<Z€'»'?""£\\:' ~2"'"~33.§*<\::'°"% Q k5§Wv'3'§§ fl ¢1rmr'3u;<5" *§o{'v' £3 * WW5 ¥i'ie.®""'€§zRYn§'W.Il'"'% %t"'K}~,E'fi>\""'$ KY Lmwawt $5 "*r.v.»*£w.v¢' @d9¥'§.~V( wwtm MI?' eammwmmmmm s¥'%~?W..;W'"% vnmwww % VmmLmm'wEm$mm.M $"Mw>?:W; %m:'9e»fi"9»éH.~"'z.§ Ma" m;v'~wm<\\z.::vxzw~w\,w~sx w xaemam « 29 Under the circumstances, we reque.s.z:~~.t?':cii_' e- instead oftreatirtg the amaurzt as bag? written 01?" we may request that _1ft_ffa;.qy considered as process wastage/clairfis on account' of defective s'._t»ock»._ [' j; ' At the same time, wet als(§"z_'e'que$t_ amount of claim meg be "
Rs..E4.87lakhs."
From the abéa--%e':%'-repiy, 1-:71', _vei'y much clear that the assessee written 0}?' the arnountA.»V~~-.df1:e' -. from, "'=Mj's.Premier Enterpeisee z£;itho1§£,f m:iz£f;ing' any ejfforts to coiieet As, per said Setter, M,*'s.f'.lreffiie»r have accepted a g:_iebv3:_bf;?§.5V3¢ 5,2 l ¢':e3c%2$::and to that extent the asse,¢;see'i"fVce1r'qag:i21y's_ "izlaém of bad debt Vregerésg 'process wastagefciaims _:'3r;. .*«:;zct:ou}:t of defective stack; the 'A '~assessee company has not produced any ~ drjrzztrrze:zt.§j'eerr'es;30:tdei'2ce if: this regard, LF'££rT£3'1v3f,. If the ciazm; was reiating to ' ,2-.9;9~4~--9.'5 {reievarzt to previous year '}--9_93sz~94) then the assessee wrripcmy _»s.zemzd have accepted the dam ef the ,. Vgxssessee 0rrejectedinthesameA.§'fA$ the assessee company is failowing the mercantile system cf acceunting, any less pertaining te Asst. Year 1994495 cmmot be ailowed in this Asst. Year. Therefere} the less eiaimed on aeeeunt sf wa3tczge/ defective stacks ameunting to Rs.}4.8?' Eakhs is hereby disaiécwee! ané added to the 393512 znesmef refiuced fiom the wwlmvwvna Wm ma-v"mw«.:mu»r~mxw~'w\»xw %lH8"V'»:fN£u\) "'hmI"<>ntV"0x#L9"¢»9i wagm.Vmm%m&r%aW.%W%%m#'% %"MMM"$ %pWM?¢"&.f \7:,~:?"és" i'=":~\:?-*€:.l;'«'e="-,*V£é¢'"*"%\.f£z'?"<ii'"§,.~'*K$ :\""'3f?3'§§:§"%""'i£5 %.«r%«.,¢'"$»_e!5-WEE Q35?" §°§s.§"'%sWI§"%é5%§.§""%%.;M. WEWM Rwiégvgfifi W?"
(iv) 33 modemisation of rniiis plant ~ 3 irrecoverable as the mili wen-t:._ iittr.} -- ' iiquidation. The Calcutta High cggzzrtg hiéid' _ that the loss was not zzirgridiiig aiirzi V hence cannot be czatmed as C1; jb*gLd deb"£..;v.I[ also rely on the decisz'o1?i;aj7._the Court in Nczrang 331:1. Vs: A .C.{.1'"i (196 7) 66 IT}? 315' Tfieref(3ré,.__theV a3s'éé;§ee"
cannot ciczim it as a *b;acZ debi--i:ft'its Account. It in me%m;n;r;e~»,qf capizamoss and hence thx3..'é§:'5se'sse;e.'S' of bad debt ofRs.264' 75 is«fu.§Iy_.adEc_:lE'o:_ved.
Debts«--@tifl£h iii v'o}'"' M/s. Tamil Nadir: Jjge es « } prooeedmgs, the asse.-tfisee asked to produce the leC§g;e...Of TNABL in its books to ?<.:zscx=:rta.irt= hat-are of azdvance and Iaétgtxeen the two oorrmanies.
Vide lei:-3r'«dt.'v4.3, 99, the asses$ee cornpcmy " jsxleaciédfliat the debts of TNABL came to its ' 1;-},§>o0?:cAs upbfi merger of two investnterzt agmpanies with it The as$essee company * *e2§;_.3re.ssed its inability fo produce the £eé:i3e'T:=éxtructs as the backs of accounts of ,£hej..-ersttuhiie companies were maintaineci at Chennai 'As bemg aiscussed under the head "Guarantee Qbligationi TNABI. was (I smali scaie industry at Chennai manufacturing batterées. As discussed in the case of U.B. Eiastomers Ltd," this j campany (2330 did net have any trade reiations as the products dealt by the assesses company are Eotaffy difierent from wmwea Wu :2"e..oor"'oo.nt~1c.x»%?\4l""a&€na¢'";'e>9-'ra.w"\z ::>.v<2xy,,.nz2~V. \»;,..x»;.v~Aw<v*<1»m mafia. uwnawmwwmmmxmtym aawmwva \w'%¢;*'¥2'm?A?§.|¥ WW $"m6t>'m9*x..z\';~a?f*'Va&s°*v.3\:m3*'% 5/:m=*w%r:< "'cws"%s3'fl»J*'¥§E'v5 MN?' iE'¥¢x:L"*"<?z.}I!'€~.WW4S'"'m!§£~'*'WWs»&**ih WKEWE'? *s.«'€ms¥»'¥e,§W."?E kfif" 37?e.€7'§¥5E'€§°"Wz"<'3'(:§;§"3%§'§t4§W WEWN 5»-m§««»W...5{*'§%' 353 made to a mill which was taken ouefé' V. lease by the assessee for modemt9afion"=af--« ' mills piant became irrecoverabte as went into liquidation. 2flLe,__C3a£g;;*i£ftt2-Ae'_g'-ii§j'h F- Court held that the IOSSVIUCIS4'i'E(}?f«_a'141§T€3.Ci'i1;g toss and hence cannot b¢e«cz;+;:rnedee ' debt. I aiso reiy on the decisian of the. Delhi "
High Court fit £'u'afa:_ig..
C.1.T. (195?) 66 ITR During the 'e,sSes:%meni 'probeedingsg the assessee compcizgy relied tgpoiztite ciecision of the Supreme.._C'our'€ 2:1 f_'1I'.Ii.TI':'- $5.3. Mysore Sugar. Qompany: Lid. .(19e2)e 4»31TR 549 in support;1iof. its' .C1CiiII'L _;'2:ic':*tS of the said case V»¢2re"'%:2taZ£§;:--. from that cf the cqmgjarty Mysore Sugar " 3:: " giveif' V advances to the farmers -«V::j'Ve<;_Lt_gei'mz2ne which is their basic '-'raw mazergaz« 'c_;."f the business aiready €¥S}fC¥£'7Z$V}'1€€3AAQ?I('?3".»eth1LS it was held as a bad debt ii': IzL*1z1£r*e ofrevenue £053. However;
, 'V "in the 'erase ef the asseesee cempaizy, the ' adzgaztces given are ta 5: new venture which %:z:s_ "r:.<:>__£ maferéafiised or is yet to be Se? up. it * _ '=u_2c;9l*-._njat in the regular course of the 'e:§*Sse.s;.%3ee's existing business and therefore er; }.the facts, the a;$$essee's case is not eomparable with that of 54/3. Mysore Sugar " iliompany Ltti, (mi) Reece, Rs..32, ?"3 Lakhs efiaizned fay the assessee eempa:v1y as Ead debt is disallowefig Debts written off in case of M/s. Sunny Enterprises Rs.£-45. 79 Eakhs:
"<».-.4-»'w;»"'¥» zmwm %iwM%.MM W mmmmm NEW r.:m§m {W ::<«;h«am$z*i§;i;§'a3ma :s¢m«.: azmm"45
fozzows;
"The arnaunt' writfgrz was ca dispute bgfzareeii as to the Jrzrnoum'------?o*~.bé..L'paid' us tr:
respect gzf «¢'3€t'.~§t12l'i}, .s'§';::L2+g2;§;.?' _ 25.2 The Asse.ssing..(_3fl'?z:er cifisérved that M/3, Sivan Coffipafiy dzshare broker and ithe}i[a7_r.ou;;in;' written». ajf the assesses dufefng gags: "w__ci:3 "gzimcunt in dispute beE!,{i£S'€';'§, the 'r:;.vb.C given to the I:?f*J?cef'.,A'was "flat having revenue natuf£:,;.Ve2$'~the%,_éz:::$es$ee is net :2 dealer in °_s'hczr'c~;s. The'ja;dj*v5znces given was payment t:;1wards~ cé2,v:}itaZ"'paymenz and hence cannot _ be2""-.alIau;'ced'=_u,k"$(36 of the 33?'. Act' He " udiSaZZ<':~u3ed the ciaim 'szzlppeiiant objects 20 the disaiiawance. it ~j.¥1f:.§;t added aznythéng to clargfy the giasitign.
2?'. iieiauid not that the assesses has been " shares only as an investor and not as a trader. it has been showing prefit and gains of trazzsacziion in shares under the head Capitai Gains and net as profit of ba$ines$, .2722 Section 56(1) require that income finm divided is to be assessed under" the head Gther Sources. 2"?2erefore,. the expenditure, if
25. The written expianation give 1 V assesses to the dated 25.92.2000 is 'i2.ni=;f'1;¢zr:d"'--;I3~$ 29 9 ,.u... wnnvnn -um ream' 48 "W13 Digital Electronics, Vi1._:_i3_: . Industries, Eagle Elect:-icals The details in this regard,_,§*7 any, fimzished to you shertly, _,?f}"ci_'g5: _fi;a£*..'~..L readiiy avatliabie. "
Rita Battling, 1., &7r }'aod Aliiszisi-011:.
Rs.2.5'7 Zakhs aw R<s.g,_,_s5 zai.-as % These are our sugzpifemi of eag';-ita£"itenzs and the arnount has remgtirzazi '<2.'ut.sta1"1;diézg for a long time Aan acor21:.ni'~.ofAcer€din During t;2,saA' year; it: azee::;ze¢2é~ that the amauntsVvar;:i;.rritten1nfiT "5 , 3 V M: fumisheci to the " A5se;;smg '(,'{,'fios?r referred to the submigfisiqhsp Q,ff" assessee in the asst.
"*_ord.€r. .
33'-9 " Qyficer amazed that the ?Aamoui:~r3A were given as advance and not tradirzg défits and are therefore not of § rgversue nature. Far azilczwance of deduczticn " -- debt written Q3'; the business ar debts shouid spring directiy from an of 4:1 busmess or trade and sshculd be incidental to it and ammo: be just Z v,__-.:'zn.y loss sustained by the assesses even if it has some cor-mectiorz with the business indirectly as held by the apex war: in Influx: Aiumirfium Company Vs CIT [3971] ?'9 I338 514 As the bad debts did net gr) to the balanoe sheet as trading debt in the business of the wwiHw;:'s:¢ wt x~wwm.;-a::m.amm.m §'M.<m9H; %,=>x.¢é?M9$'€z.& wmwwmammm, e:"~aszw.<<M =ia,.~*<».m~.$sz:s*.~,.:e *w?'§" zz"¢.e'«§boe<ms"e>:a¥»»;.M<'»m§wm rmww mmwwm. MW" mmmmmwmmm W&%..'.M°"%a £..Wl£.¥£>€.§ we §':»4.;%M%2€"v:?.<?a%>§.$"o'%;\§'%.4,§i9<2> E°"§E%w:'*E?"§ 5"a,.«€'.37ME£§ :31 the same should be aiiowed under the IT ~ V. deparfrnent had not brought out any I'_€?--£*§$Of1"._fsE)2' denying the claim of the %.S"é:'$S€-.:"€:'. ' direct the Asswing Officer to _alIcrLv me%'eem:.+¢ ofthe assessee, amowzting toifes. " V
19. Thus, the assesseo:-1§v~on V write ofibad debts.' V 4' V ~
20. In so far as the guarantee issued by me assessce fidicated above, the adgudicatilfg that the asseseee is not by way of any expaer1di{i:;1°6 __'.3_'?- er the Act by indicatillg the reasons aS"tiYf§l!C"i€3iv'Z' 1 W H .
eA'Bisaf§e£:fi:tne»e of expenses refuting to " :'.A1-gm-'5. Téifiiinaéa éiimlirce Bcfiitefiee VL§--_:g_;§§ed LTNABM:
V ;:3L;s7._p'ef the assessee conzpazzy} TNABL was .-eagaged in marmfacmrirzg of Batteries at . fihennai which was awned by two Subsédiczries of {.13. Ltd. namely Goidezz investments Ltd, anci East Cfoast Irzvestnzents Ltd TNAEL abtained a iocm sf Re. 26 {cache from Tami? fllafiu {nvestment Carporatian for which Goiden Izweszntents Ltd' and East Coast Imrestrzzents Ltd. were the guarantors by viriue of the deed executed on 10.I§.Z985A TNABL azxaiied 53'; 2:35:22 fiom Bank of Madam Ltd. and the wssessee company; M/s. H 'U;'\'f'If'EL company promoted as a' '¢.':}G:'l;¥?;f ' 'Seem?' owned subsidiaries E}. Ltd) -qfid Orzlssa State Inciustnal Beyelopniegt Co"r;;oratio1*t. The said csmjbany beéaflifi "sick and its revival became ci;i)j'7i:-33.13;' --. When it approached the_ firz'atnc:iaZ"" for fiJ,nc2$;.. insisted on the farogézzztezse br'izzg.Vi1:"mbre fimds as co-gbifrgfiVfbr3'..the-..jre1}:zzci;? bf' the company, It was this» that M/s. UCL " Ltdffor guarantee to avail Same' j°£zzé.=*1_ce fcmd that is how the fassessee. guaranteed to M/s. P¢'agarjzina"',f=--'£;iczzzce Ltd._, Vysya Bank M Leasmg VLi£d.'=_an'd Excel Finance Ltd. during " me m?:...Vz99o%--92.
'I'h;us fiam -»;2.b0Vve.seq;;ence of eventes, it is very mz£c.h'c.fa_'.ea;".,t?:m UCZL was a sick company ' Any prudent guczzénfor wowid net _}'§'aire guaranteed the of M/s,UCL' without praperiy ' p.'%*Ot€E'iif£gT 0:32}: finammrial interest. Haxwevef; of knowing these fads} _ -~g$séssee"cm1pczny stood as guarantors "retx, 21$!/.' ,~§; UCQE; without any adequate in return, In fame in 1994, '-M/sf,'£fCI;'~u2as deciared at sick company by the iatter }%1alZy ordered ta self fher assets of me ccrmpany and for its wirzdirtgr up.
w"""' wv~r1smmm%wu"'msw"%am'%-fiw. i§ibF€"0u$'§"'K5 '§av'%f5§JW.§ Q2233"
As per the details furnished Communications Ltd. {M/s._ u:::L; % 'mm Company in the state O71:-sjsayv maztufacnzre of teiecom 'equ:'_pme32'fs.., The'; . main sharehoEdere__ "were " thine whbiiy' WWW Wwm W mmwmm mm Kflfiflf W £%ifl%§N&"E"fiE&i'& §«m:s2:~«z €.T:<';;%%.§§\':§"i? W %<m.@2-«s§.mfi§m.m éééé"
67assesses to stand as guarantor instead7 subsidiaries with that azim of awning £<::;:'s;'t3.._t0_ set off czgaznst ii.'-3 own :;m:ome fer' ' " A pwpase cf iii<}'}??i8'-ic27.?€. Cc3iwm;'5i--i'io7zs*'* 53*» 1 * reducing prqfit so as to avoid tg;c"'£;;a;E9.i1gty ammo: be taken :0 In-f3...ge_:mt'::ae Eju:é€i2ze*1;s.<;;}_ consideration." I " '-- =
22. The Tribtznai on éf'~-t:_i'1é:"'inatter, has aflowed the claims ef the asses.sz§e:--~.fb1*AA "the anlount as deductibie zlfider of {he Act by re£:ordi1:";g as {II}(i't21§:_; V ' 'Aéfar cz;~V:.fVVg7;::z;%dn[tée::'G£>ligtztion is czmmmed, thzs issue zszfitily €:£:§ m2re2::;f"';E?;#,%" the deciséan of the ETA?' rendered *3}: tzssesseéfis own case for the asst, year 19 9;'E¥~_~96..€;*: in N0. 94 ?/BN6/E998 referred supra. Henggaéwe fiirect reitej' of thasse sums . - _ "v5?JQ'g3?1.fe*g;affi;j1g to Rs. 53., 35 Eakhs. 5 t£1*"3<§x*£:n 'V ib}{}£)W its awn View taken in res 1: of the V6 in .
£1SS€SSé€..I;'V.!}f tiie, assessment year 1995496.
" '£'I:*{€; thirci questierz rsiating I0 'iegai exgjerises' is 3 % qaJ::::s.3ti03:2 answered by the 'E'I*ibu11.a1 being 01: EEK: View ti'1,a_i it "is a 'I'€V€I1'£.lC expenditxlre' whareas the zzariiér two autharitieg .. W. W. MK' WWW: W wmwmmwm mm mm? W mwmmm WW azmgaw W aimm' .1?
?8 that it (33.11 be ciaimed as irracoverabla ciebi and €}1€;I"(*".1fC)I'€ a 'bad debt' can be clzdmed as an amount {:0 be as a deducticn in ccmpnting the profits G1"
it is so written ofi'; that such is ',1:h€».Aréq1iiréi:nezitV. 'e:§_ré;,1 in ' terms of section 36[1j[vii] of the Act w?h_i(:i"2 reeds g:'..S4_Vun(_§;er:
"36[1][vi1]. Subject to the prbyisiions of sz;.b--se¢Iion [2], the amount of:-alny (yr pciré"~At}1ereof which is written ---..g§fi° as mewvérable in the accounts of the assesses for1'the_p're'w§dus year Provitiegi rhaif in the assessee to which Cl£1:Efi3£3:A: [L'ii€ij" aggxplies, jf ,the £:i;mount of the deductiém ziéiqfiirig stash-.»¢iebt or part thereof shall be to tfze h:rrca;,;11t by which such debt or 'thggreof t}2,gé"t:fedit balance in the protgésicxz jb:.f=12ce::Z_ d~m:;bt_f*'ui debts accoumf made under that V. _ Expéafflaaioyz '*.~ Fbr the purposes of this arty debt or part Eherecfwrittezen of as "é.?f€cG3Ie}*ab£e acmunts of the assessee shaii : " «rzoi any provision far bad and doubgfizé " the accounts of the aasessee. 3 i:1'i:1é§Aafi$eI;ce of any matefiai either to irldicate that it xfi,-i*;.a5;AAV9';L'«:§cbf:' ii} the first instance er that any aiibris had been ___'2i:':aé$ $11 the part sf the assesses to reccrver {ha amgunt, ':';here was I1€5V€1" arxy questien af pemnitting the assesses to %/ ....'mwv M .WW.ww w mwmmm if"aIiWW'|!'"'§ mmm W wmwmmwie Wm mqmm" W mwxmmm mm»: mtgm' mwfigmm mm mmém 3.91 in fact: (1063 not positively spell out the reas<_:=;:r1s«' indicates that no error was fozmd in the .. of tile. _ '1'I'ibL1I1a1.
62. In ihct, the Judgment of BHILA BROS case referred to féfifiraj to the notice of this court oz1'.1:1 1<=: therefora the Judgxnent very assesses: for the assessmefit in 292 ITR 188 has aiso 1:5 tiffiision rendered per incuriam (iecision of _Sa1pi*e;11ic £"3«:§i;':I*t.
'j_§i'3; , :2; théigibre faflaw the birzding decision at' the siu=;§§~em 'comazsszanmk 03* Imam TAX % £5,-E1§=mAIJ,'9¢&LcUTTA vs. 313.223 Bass. 9. LTD.,' reported 73'" ITR" 751 and applying this de-:;iSia11, we have to answer gubstantiai questiazta No.8 eqtzivaienz {Q 'T . ;5a;1*2;§"aph~36s ef the memorandum of appea}. in FFA No.49?
3%/,.
E51' 2801 against the assesses 2:11:31 in favuur of the revenue.