| Case ID |
2b97acb8-49c2-4f43-bbea-95178fa72cb5 |
| Body |
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| Case Number |
IT REFERENCE No. 225 OF 1973 |
| Decision Date |
Jan 29, 1976 |
| Hearing Date |
|
| Decision |
The case revolved around the claim of the assessee, who was a sole selling agent for two mills, regarding a loan advanced to a company that was later claimed as a bad debt. The Tribunal found that the loan was not made in the course of any money-lending business, as the assessee failed to pass a resolution for such an activity or obtain the necessary license. Furthermore, there was no evidence to support that the debt had become irrecoverable during the year of account, as it was only written off after nine months. The findings indicated that the amount could not be claimed as a business loss or trading loss, leading to a decision against the assessee. |
| Summary |
In the case of Roop Narain Ram Chandra v. Addl. Commissioner of Income Tax, the Allahabad High Court addressed the issue of bad debts under the Income-tax Act, 1961. The assessee, acting as a sole selling agent for two mills, claimed a significant amount as a bad debt after advancing a loan to a company that subsequently went into liquidation. Despite the memorandum of association permitting money-lending, the Tribunal found that the necessary steps to authorize such business were not taken, nor was there any documentation to indicate the legitimacy of the advance. Ultimately, the court ruled that the claim for deduction was inadmissible, highlighting the importance of proper documentation and procedural compliance in financial transactions. This case underscores the legal intricacies involved in claiming bad debts and the necessity for businesses to maintain rigorous records to support their financial claims. |
| Court |
Allahabad High Court
|
| Entities Involved |
Messrs. Elgin Mills Company Ltd.,
Messrs. Kanpur Textiles Ltd.,
Sri Brahmaputra Tea Company (India) Ltd.,
Messrs. S. B. Industrial Development Company (P.) Ltd.,
Messrs. F. Cosier (India), Calcutta
|
| Judges |
C.S.P. Singh,
R.M. Sahai
|
| Lawyers |
U.S. Awasthi,
D.R. Bajpai,
N.C. Pandey,
Deokinandan
|
| Petitioners |
Roop Narain Ram Chandra
|
| Respondents |
Addl. Commissioner of Income Tax
|
| Citations |
1978 SLD 472 = (1978) 112 ITR 890
|
| Other Citations |
Not available
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
36(1)(vii),
36(2),
41(4)
|