NAINITAL BANK LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under section 66(1) of the Income-tax Act. The question which has been referred to us for opinion is :

(2.) THE facts giving rise to the reference may be shortly stated : THE assessee is a banking company with its head office at Nainital and branches in different towns of Uttar Pradesh. One of the branches of the assessee was in Ramnagar. On June 11, 1951, there was a dacoity in the Ramnagar branch in which currency notes of the value of Rs. 1,06,000 and numerous ornaments and pieces of jewellery which had been pledged with the bank by some of its constituents had been taken away by the dacoits.

(3.) THE manner in which the settlements were arrived at way this : Where the market value of the pledged property at the time of the pledge was more than the amount which had been advanced on the security of these ornaments, the excess was paid to the pawner and where it was less, the balance was recovered from the constituents and the loan accounts were treated as adjusted. THE cases where the excess was paid to the constituents were very few. THE total adjustment of the debts thus made amounted to Rs. 48,891 in the assessment year 1953-54 and to Rs. 1,21,760 in the succeeding assessment year 1954-55.