COMMISSIONER OF INCOME TAX Vs. INDEN BISELERS

JUDGEMENT

(1.) IN this tax case, the following question of law has been referred at the instance of the Revenue :

(2.) THE brief facts leading to this reference are as follows :

(3.) THE Department contended that the amount advanced is not an unrealised sale price, that the amount was advanced to some one absolutely foreign to the assessee's business, that it is merely an advance, that its realisation did not go to swell the profits of the assessee and that, therefore, the claim cannot be allowed as a bad debt. It is also conceded that it is not an expenditure but a mere advance by the assessee also cannot claim the same as an expenditure under section 37(1) of the Income-tax Act. It is further contended that the amount has been advanced to enable the Corporation to purchase the lorries and, therefore, the advance related to a capital item and not incidental to the assessee's business in view of the fact that a tripartite agreement has been entered into between the assessee, the Corporation and Sundaram Finance Private Ltd., under which the assessee had a right to take over the lorries which originally Sundaram Finance Private Ltd. had, under the hire-purchase agreement entered into by it with the Corporation.