COMMISSIONER OF INCOME TAX Vs. PONDICHERRY INDUSTRIAL PROMOTION DEVELOPMENT AND INVESTMENT CORPORATION LIMITED

JUDGEMENT

(1.) HAVING heard counsel and gone through the elaborate order of the Tribunal, we are not in the least satisfied that any reference is called for, as sought by the Revenue.

(2.) THE respondent-assessee is the Pondichery Industrial Promotion Development and Investment Corporation. In order to protect itself against the likelihood of default in the repayment of monies lent by it to the entrepreneurs to encourage whom the corporation has come into existence, the assessee had obtained a guarantee in respect of such lending to the extent covered by the terms of the guarantee, from the Deposit Insurance and Credit Guarantee Corporation. Under the terms of the guarantee issued by that corporation, that corporation was to pay to the assessee the percentage of the lending with which the guarantee had been provided. It was entitled to subrogation of the assessee's rights for recovery of the amount from the borrower, and in the event of recovery, the amount recovered was to be shared in the proportion in which the amount guaranteed was proportionate to the total amount lent. THE assessee was required to make a separate claim in respect of each borrower, who had committed default in repaying the monies.