LAWS(MAD)-1945-11-1

COMMISSIONER OF INCOME TAX Vs. TALUPURU VENKATASUBBIAH CHETTY

Decided On November 23, 1945
COMMISSIONER OF INCOME-TAX, MADRAS Appellant
V/S
SRI TALUPURU VENKATASUBBIAH CHETTY. Respondents

JUDGEMENT

(1.) THE assessee is the manager of a joint Hindu trading family, which deals in timber, iron and hardware and runs a money-lending business. Before 1933 it carried on a separate money-lending business in partnership with one Chinni Veeraswami Chetti. This business was dissolved in 1933 and its assets were divided between the partners. As part of its share the family of the assessee received certain promissory notes executed by persons to whom the partnership had lent money. At the time of the dissolution these debts were regarded as being good and were entered in the books of the family relating to its own money-lending business. From time to time the promissory notes were renewed and interest was paid to the family by the debtors. This interest was included in the profits of the family and assessed to income-tax accordingly.

(2.) IN the year of account, 1941-42, the assessee wrote of as being irrecoverable three debts, namely, Rs. 3,182, Rs. 4,382 and Rs. 1,291, making in all Rs. 8,855. The assessee claimed to be entitled to deduct this amount in calculating his assessable income by reason of the provisions of Section 10(2)(xi) of the INdian INcome-tax Act. The INcome-tax authorities refused to recognize the validity of this course, but it was upheld by the INcome-tax authorities refused to recognize the validity of this course, but it was upheld by the INcome-tax Appellate Tribunal, Madras Bench, in an order dated the 11th May 1944. At the instance of the commissioner of INcome-tax the Tribunal has referred to this Court under the provisions of Section 66(1) the following question :-