COMMISSIONER OF INCOME-TAX Vs. S. M. CHITNAVIS

JUDGEMENT

(1.) THIS is a reference under Section 66 (2), Income-tax Act (11 of 1922). The following two points have been referred to this Court for decision by the Comissioner of Income-tax:

(2.) THE Commissioner of Income-tax has in stating the case, answered the first question in the negative and the second in the affirmative.

(3.) A few facts which occasioned this reference under Section 66 (2), Income-tax Act, may be stated here. The assessee submitted a return showing Rs.74,668 as his total taxable income for the previous year for purposes of assessment of income-tax for the ensuing year 1926-27. The Income-tax Officer after looking into the accounts assesssed him on an income of Rs.1,16,480, but in the appeal the Assistant Commissioner of Income-tax, Nagpur, reduced the assessable income to Rs.1,13,012. This included Bs. 86,307-11-0 under the head of business profits taxable under Section 10 of the Act. The assessee complains that in fixing the business profits at this amount the item of Rs.7,481-13-9 out of a sum of Rs. 17,982 debited on account of bad debts was wrongly disallowed, and, the sum of Rs.16,031-4-6 which represented unrealized interest, was wrongly treated as 'income' in the accouut year.