Barin Ghosh, J. - (1.) The following question as framed under Section 256(2) of the Income-tax Act, 1961, is the subject-matter of this reference : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the disallowance of the bad debts for the assessment year 1986-87 in respect of two debts, amounting to Rs. 12,439 and Rs. 1,23,277 ?" The assessment year involved is 1986-87. The concerned previous year ended on October 30, 1985.
(2.) During the concerned previous year, the assessee wrote off, amongst others, a sum of Rs. 12,439 and a sum of Rs. 1,23,277 payable by Sarada Press, Bhagalpur, and Amit Agencies, Allahabad, respectively, treating the same to be bad debts and claimed deduction under Section 36(l)(vii) of the Income-tax Act, 1961.
(3.) The assessee had filed a statement along with the return where it was contended that in spite of the best efforts made by the assessee, the aforementioned payments were not forthcoming. As appears from the assessment order, the assessee was requested to prove that the said sums had become bad debt during the relevant previous year. The assessee, therefore, produced certain correspondence made with the aforementioned debtors. During the course of hearing before the Assessing Officer, the assessee submitted that due to the smallness of the amounts, it was not considered worthwhile to take legal action to recover the subject debts.;