- (1.) THE Court: Briefly stated, the questions of law being the subject matter of this reference, arise out of the facts and circumstances as follows: - "The assessee has been trading with Messrs. White Lamb and Finlay Inc. of U.S.A. for a long time and was exporting jute goods to them regularly on 120/150 days D.A. basis. However, in respect of shipments made from 27th July, 1978 covered by 6 bills aggregating to Rs. 22,98,172.20, the foreign Company failed to honour the bills on presentation even after extending the due dates at their request in January and February, 1979."
(2.) THE assessee, in the circumstances, wrote off the aforesaid sum of Rs. 22,98,172.25p. The foreign buyer was declared insolvent on 14th April, 1980 though the proceedings had started on 26th July, 1979. The amount was actually written off on 30th September, 1979 corresponding to assessment year 1980 -81.
(3.) THE deduction on account of bad debt, however, was not allowed on the ground that the assessee had failed to establish that the debt had become irrecoverable. The assessee, in the circumstances, once again claimed deduction in the assessment year 1984 -85 which was also disallowed. In both the matters, pursuant to the directions issued under section 256(2), two separate references were made by the learned Tribunal. The question of law which arises for consideration is whether the debt written off during the assessment year 1980 -81 can be allowed to be deducted either in the assessment year 1980 -81 or during the year 1984 -85 as claimed by the assessee.;