| Case ID |
205b78d4-7bc5-43de-8c8e-c6694c827fb5 |
| Body |
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| Case Number |
D-2741 of 2016 |
| Decision Date |
Jan 01, 1990 |
| Hearing Date |
Sep 30, 1972 |
| Decision |
In the case at hand, the tribunal had to determine if the amount of Rs. 1,05,406, which the assessee wrote off as a bad debt, was rightly disallowed by the Income Tax Officer (ITO). The court concluded that the original amount represented circulating capital and could not be deemed a capital asset as it was not utilized due to governmental restrictions. The assessee's claim for the bad debt was justified as it was unable to recover the amount for over 20 years. The tribunal's earlier decision was overturned in favor of the assessee, allowing the deduction for the bad debt. |
| Summary |
The case revolves around the assessment year 1972-73, where the assessee, Indian Oxygen Ltd., faced issues regarding the allowance of a business loss due to an amount that had been stranded in its closed branch in Pakistan since 1940. With the geopolitical tensions leading to restrictions on repatriation, the amount became vested with the Custodian of Enemy Properties. The court emphasized the importance of recognizing the nature of the capital involved, determining that the amount was part of the circulating capital rather than fixed capital. The final judgment favored the assessee, allowing for the write-off of the bad debt after considering the relief provided by the Government of India. This case highlights critical aspects of business loss deductions under tax laws, relevant to companies dealing with foreign branches in politically sensitive regions. |
| Court |
Calcutta High Court
|
| Entities Involved |
Government of India,
Indian Oxygen Ltd.,
Custodian of Enemy Properties
|
| Judges |
Suhas Chandra Sen,
Bhagabati Prasad Banerjee
|
| Lawyers |
Dr. D. Pal,
Miss M. Seal,
Bagchi
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Indian Oxygen Ltd.
|
| Citations |
1990 SLD 2021,
(1990) 184 ITR 339
|
| Other Citations |
CIT v. Eastern Spg. Mills Ltd. [1980] 126 ITR 686 (Cal.),
Indian Leaf Tobacco Development Co. Ltd. v. CIT [1982] 137 ITR 827 (Cal.),
CIT v. Indian Oxygen Ltd. [1978] 112 ITR 1025 (Cal.),
CIT v. Indian Oxygen Ltd. [1978] 113 ITR 109 (Cal.),
Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1 (SC),
CIT v. Canara Bank Ltd. [1967] 63 ITR 328 (SC)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
28(i),
40A(5),
37(1)
|