VIJAYAKUMAR MILLS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a textile mill manufacturing yarn. For the assessment year 1964-65, the relevant accounting year ended on March 31, 1964, the assessee-company returned an income of Rs. 2,53,368. THE assessee, in the assessment proceedings, claimed a deduction towards bad debts in the name of Vijayakumar Cotton Press and another, totalling to Rs. 1,37,760. THE Income-tax Officer disallowed the claim on the ground that the advances made to the parties were not for the business purposes of the assessee. THE Appellate Assistant Commissioner, on appeal, confirmed the view of the Income-tax Officer. THE Appellate Tribunal, on further appeal by the assessee went into the matter and found that the claim of the assessee that the amount represented business debt and the loss of money returned should be treated as business debt cannot be accepted and in this view of the matter, the Tribunal held that the Income-tax Officer has correctly added the sum of Rs. 1,37,760, in the computation of the income of the assessee, disallowing the claim of the assessee that it is a bad debt.

(2.) PURSUANT to the directions of this court, the Appellate Tribunal has referred the following question of law for our consideration :