JUGGILAL KAMLAPAT BANKERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, M/s. Juggilal Kamlapat of Kanpur, the Income-tax Appellate Tribunal, Allahabad Bench, has submitted this statement of the case with the following question of law for the opinion of this court :

(2.) THE assessee is a partnership firm and at the material time carried on the business of banking and derived income from interest on securities and property, etc. It owned a factory premises known as J. K. Ginning and Pressing Factory, which was leased out to M/s, Naraindass Gopaldass on an annual rent of Rs. 8,000. In the assessment year 1957-58, which is the assessment year in dispute, the assessee did not show in its total income the sum of Rs. 8,000 on the ground that the amount had not been realised from the lessee nor was there any likelihood of its being realised. THE Income-tax Officer, however, included this amount in the total income of the assessee on the ground that the rent had accrued to the assessee and as the assessee had been following the mercantile system of accounting, it was a part of its taxable income; THE Tribunal dismissed the assessee's appeal on the finding that "the admitted fact is that the assessee had been showing its income from lease rent on accrual basis and had been assessed as such". Later, the assessee applied under Section 35 of the Act for rectification of the Tribunal's order on the ground that the above-quoted observation of the Tribunal was factually incorrect inasmuch as the assessee had never admitted that it was being assessed on accrual basis in respect of the income from lease rent. THE Tribunal accepted this contention and found that there was no material on the record suggesting that the assessee was showing its income from lease rent on accrual basis. According to the Tribunal, however, this rectification did not in any way affect its decision inasmuch as the assessee was being assessed on accrual basis on its income from this lease.

(3.) AS regards the second limb of the question as to whether this amount can be assessed under Section 10(2A) of the Act, it is difficult to understand as to how that provision applies. Section 10(2A) makes a provision for assessment of any loss, expenditure or deductions allowed to an assessee in the past which is realised or received subsequently. The sum of Rs. 8,000 could be assessed under Section 10(2A) only if it had been allowed as a deduction by way of bad debt in the past and had been realised in the relevant previous year. This is not the case here. AS such, the question of its being assessed under Section 10(2A) did not arise. This provision applies to the sum of Rs. 4,000 which the assessee received in the relevant previous year from M/s. Naraindass Gopaldass out of a total debt of Rs. 3,30,896 including the arrears of rent which the assessee had written off in the previous year relevant to the assessment year 1956-57. That amount has already been brought to tax under Section 10(2A). There is no question of the sum of Rs. 8,000 which is the subject-matter of this reference being taxed under Section 10(2A) of the Act.