R.JAYASIMHA BABU, J. - (1.) THE appeal is by the Revenue. It is aggrieved by the Tribunal's order which allowed as a trading loss a sum of Rs. 71,880. The respondent-assessee carries on trade in paper.
(2.) THAT amount had been claimed by the assessee as bad debt. That sum, according to the assessee, was part of the sum that was due from Ananda Traders to whom the assessee had made supplies and from whom the assessee had taken possession of stock of paper valued at Rs. 21,43,724.45. The papers so taken over, according to the assessee, included paper of the value of Rs. 71,880 which had been supplied to that debtor by a third party Dena Paper. Subsequently, on Dena Paper demanding the payment of that sum, the assessee made the payment to Dena Paper, which also happened to be a debtor of Ananda Traders.
(3.) THE assessee's case is that the consequence of the payment made by it to Dena Paper was to increase in that amount the debt owed to it by Ananda Traders which debt in excess of the value of the paper seized less the payment made to Dena Paper, was irrecoverable and thus constituted a bad debt. That claim was rejected by the AO and the CIT(A).;