GAPPUMAL KANHIYALAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question has been referred to us under section 66(1) of the Indian Income-tax Act :

(2.) THE question arises, according to the statement of the case submitted to us in the following way. It appears that the assessee had advanced a certain sum of money on the basis of a mortgage deed which he put into suit on July 16,1932, and in which he obtained a decree from the subordinate judges court. Upon appeal, the appeal was allowed and suit was dismissed on the ground that the transferors had no right to transfer the property. At that time the amount of Rs. 24,794 stood to the debit of the account of the mortgagor debtor.

(3.) ON the other hand, it was contended before us that according to the the assessees system of accounts no debt remained outstanding after the entire made in the accounting year 1938-39 when the entire principal amount expenses and interest were written off and that therefore the expenses now sought to be deducted could not be said to be expenses incurred for the protection of the debt created by the mortgage deed and that the expenses were not connected with any business of the assessee. It is further contended that expenses could only have been allowed in the year in which they were incurred.