Y.R.Meena, J. - (1.) On an application under Section 256(2) of the Income-tax Act, 1961, this court has directed the Tribunal to refer the following questions set out at page 2 of the paper book for the opinion of this court; "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee's claim was not allowable under Section 28 of the Income-tax Act, 1961, being deductible business loss in the year under reference ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in rejecting the assessee's claim for deduction of the sum of Rs. 1,76,751 as a bad debt ?" In compliance with the direction of this court the Tribunal has referred the aforesaid questions along with the statement of case.
(2.) The assessee is a private limited company carrying on the business as tea brokers, auctioneers and financiers. During the year ended March 31, 1982, relevant to the assessment year 1982-83, the assessee has debited an amount of Rs. 1,76,751 in the account as "irrecoverable advances written off." The above debit had arisen out of Rs. 2 lakhs advanced in the course of business to Shri R.P. Gupta against the required financial accommodation of Rs. 3.20 lakhs as per agreement dated March 21, 1978.
(3.) Shri Gupta had claimed to be a lessee proprietor of Mullootar Tea Estate and he had promised to sell the entire crop of the tea estate through the asses-see-company. Accordingly, an amount of Rs. 2 lakhs was advanced to Shri Gupta in 1978 in different intalments. However, the sales of tea of the above tea estate effected through the assessee-company was Rs. 23,249 only in May, 1979. After the above date no communication was received by the assessee-company from Shri Gupta.;