MAGANLAL BROS P LTD Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
Click here to view full judgement.
B.B. Palekar, Vice President -
(1.) THE dispute in this appeal is about the admissibility of a sum of Rs. 52,252 as a bad debt or as a business loss in the assessment of the assessee for 1976-77. THE corresponding previous year is the calendar year 1975. THE bad debt arose in the account of Jaifabs Rayon Industries (P.) Ltd. THE case of the department is that the claim is premature.
(2.) The assessee sold goods to the debtor in 1974. Cheques received from the debtor were not realised. Jaifabs Textile Mills (P.) Ltd. took over Jaifabs Rayon Industries (P.) Ltd. The creditors of Jaifabs Textile Mills (P.) Ltd. forced it to go into liquidation and its affairs vested in the official liquidator. The assessee was an unsecured creditor but there were other secured creditors.
Jaifabs Textile Mills (P.) Ltd., while opposing the application in the matter arising under Section 391 of the Companies Act, 1956, proposed a scheme for settling its affairs and stated, inter alia, as below :
If the proposed scheme is not approved, there is every likelihood of the secured creditors enforcing their security by putting up for sale the lands, buildings, plants and machinery as fixed assets of the Company and it would not realise full value thereof, leaving very little surplus available to the unsecured creditors, whereas by the proposed scheme, the Company would be in a position to pay off all its creditors in full with interest within a period of some years only. The said payment would be made by the Company out of its profits.
(3.) THE assessee wrote in the past repeatedly to the liquidator but was given to understand that there was no possibility of making payment to unsecured creditors of the company "in near future". A similar reply was received by the assessee from liquidator even in January 1982.;
Copyright © Regent Computronics Pvt.Ltd.