COMMISSIONER OF INCOME TAX Vs. MAHARAJA OF BIKANER

JUDGEMENT

(1.) THIS is an application by the Commissioner of Income-tax, New Delhi, under sub-section (2) of section 66 of the Indian Income-tax Act, 1922, praying that we should compel a reference thereunder by the Income-tax Tribunal, Delhi, under the circumstances hereafter mentioned.

(2.) THE assessee before us is His Highness Maharaja Karni Singhji of Bikaner. He was assessed to income-tax for the year 1955-56, the accounting year being that ending on March 31, 1955. THE dispute is about two sums of Rs. 1,00,000 and Rs. 1,50,000 which were alleged to have been advanced by the after of the assessee, late His Highness Maharaaj Sardul Singhji of Bikaner, to one Ihsan-ul-Haq on the basis of two agreements dated the 26th November, 1948, and the 8th December, 1949 (see annexures 1 and 2 to this application). THE assessee claimed a deduction for the total of Rs. 2,50,000 as bad debts under section 10(2)(xi) of the Act. THE Income-tax Officer repelled this contention. His findings, put briefly, were : (1) that the assessees father did not carry on any money-lending business as such, (2) that this was not a case of money-lending on the facts and circumstances surrounding the transaction in question as evidenced by the relevant agreements, and (3) that the debts had not become irrecoverable in the assessment year or perhaps not at all. Aggrieved by this decision, the assessee went up in appeal to the Appellate Assistant Commissioner. THE latter upheld the finding of the Income-tax Officer on the first two points, but, on the third point, he came to the conclusion that the debts had become irrecoverable on the further material which had been produced before him. In the result, he dismissed the assessees appeal. THEreafter, the latter went up in second appeal to the Income-tax Appellate Tribunal, Delhi Bench A. THE Tribunal held the that assessees was a case of money-lending and observed tht the more fact that he had returned the interest income as income form other sources in his income-tax returns could not be taken to mean that "the factum of real business carried on the by the assessee should be forgotten." THE Tribunal further found that the particular instance which was in dispute was a case of money-lending and the loss which resulted to the assessee in consequence thereof and which he had to write off was allowable as a deduction of a bad debt. In the result, the Tribunal allowed the assessees claim with respect to the amount in question. THEreafter, the Commissioner of Income-tax made an application to the Tribunal under section 66(1) of the Act for referring the question of law which arose from its order to this court, but it was rejected by its order dated the 16th December, 1963, on the ground that the finding arrived at by the Tribunal were those of the fact and no question of law arose form them. Hence the present application.