1966 PLP 378 (PTD)
SETH CHAMPALAL RAMSWARUP, BEAWAR Versus COMMISSIONER OF INCOME‑TAX, U. P. & V. P.
| Citation | 1966 PLP 378 (PTD) |
| Forum / Court | Allahabad (India) |
| Bench Members | Jagdish Sahai and S. C. Manchanda, JJ |
| Parties | SETH CHAMPALAL RAMSWARUP, BEAWAR Versus COMMISSIONER OF INCOME‑TAX, U. P. & V. P. |
| Primary Law | STATEMENT OF CASE |
Q1: What are the key laws and sections cited in 1966 PLP 378 (PTD)?
This judgment primarily cites: STATEMENT OF CASE as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 1966 PLP 378 (PTD)?
The case was heard and decided by the Allahabad (India) bench comprising: Jagdish Sahai and S. C. Manchanda, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 1966 PLP 378 (PTD) (SETH CHAMPALAL RAMSWARUP, BEAWAR Versus COMMISSIONER OF INCOME‑TAX, U. P. & V. P.). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- In view of the fact that the parties have partly succeeded and partly failed, we direct them to bear their own costs. We, however, assess the fee of learned counsel for the Department at Rs. 300.
Headnotes / Summary
Bad debt‑When debt becomes bad‑Mercantile system of accounting, effect of‑Appeal to Appellate Tribunal‑Duty of appellant to show that order appealed from is incorrect‑Omission to refer to particular piece of evidence‑Whether vitiates judgment Reference‑Transfer of area to another State after application for reference‑Jurisdiction of High Court to dispose of reference General principle as to continuance of jurisdiction‑State, Reorganisation Act, 1956, Ss. 10, 64, 123, 125 &
252. The assessee, a Hindu undivided family, carried on specula tion business with R till 1929‑
30. A sum of Rs. 2,74,580 was due to the assessee from R. The assets of R were taken over by the assessee in 1931 leaving a debit balance of Rs. 1,03,17b. From 1931 to 1942 nothing was realised from R and though R acknowledged the debt from time to time it was evident that he did not have the means to repay the debt. In 1943, the debt was settled at Rs. 10,000 which sum was realised by 'the sale of ornaments belonging to R and the balance was written of and, claimed as a bad debt. The Tribunal held that the debt had become bad prior to the accounting year and disallowed the claim, and in doing so relied on the fact that nothing was recovered from R for ten years and no interest had also been paid. The assessee contended that the finding of the Tribunal was vitiated as no reference was made by it to an affidavit filed by one D. The assessee also raised a preliminary objection to the jurisdiction of the Allahabad High Court on the ground that as result of the States Reorganisation Act, 1956, Ajmer, from where the application for reference had been made in 1951, had become part of Rajasthan in 1957, when the reference was heard: Held, (i) the question relating to the jurisdiction of a Court or Tribunal has got to be determined on the basis of the conditions existing on the date when the suit or proceedings were started. If on the date of the filing of the suit or initiation of the proceedings a Court had validly entertained the suit or proceed ings it would continue to be seized of it even though later on the area from which the suit or proceeding arose has gone out of the territorial limits of the jurisdiction of that Court. This general rule is, however, subject to the exception that if there is a provision contrary to it in a statute the question relating to jurisdiction is to be governed by that provision. There being no such contrary provision in the States Reorganisation Act, 1956, with regard to references under the Income‑tax Act, the Allahabad High Court continued to have jurisdiction to dispose of the reference which was pending before it. Venugopala Reddiar v. Krishnaswami Reddiar 1943 A I R 1943 F C 24 fol. (ii) In an appeal to the Tribunal the burden is on the assessee to show that the order passed by the Income‑tax Officer and the Appellate Assistant Commissioner are not justified. It is not the function of the Tribunal to look into every bit of evidence for itself or to make a roving enquiry. An appellate authority unlike a trial Court has only to see that another person who has primary authority has properly dealt with the case. If a point is not mentioned in a judgment the presumption is that it was not argued before the authority. The finding of the Tribunal was not vitiated merely because there was no mention in it of one of the pieces of evidence. The Tribunal's finding was also justified on the facts and hence the sum claimed as bad debt could not be allowed in 1944‑
45. In 1937‑38 petitions were filed against the assessee for having it adjudged as insolvent. The assessee resisted the petitions and had to pay fees to its attorneys. The expenses were incurred in the period 1938 to 1941, and the bill of costs‑of the attorneys presented for Rs. 50,000 was settled at Rs. 24,000 in 1943. The Tribunal held that as the assessee maintained the mercantile system of accounting the sum paid could not be claimed in the assessment year 1944‑45 incurred: Held, (i) expenses incurred in opposing an insolvency petition are admissible under section 10 (2) (xv). (ii) Even under the mercantile system a liability arises only after its accrual. Till the bill of the attorneys was finally settled there was only a floating liability, and it was only after the final settlement of the bill that the liability for paying it accrued. The sum of Rs. 24,000 was, therefore, deductible in the assessment year 1944‑
45. Calcutta Co. Ltd. v. Commissioner of Income‑tax (1959) 37 I T R 1 distinguished. [Case‑taw referred.] In pursuance of the order of the High Court of Judicature at Allahabad passed on December 11, 1957, we hereby draw up a statement of the case and submit it to the High Court for the opinion of their Lordships under section 66 (2) of the Indian Income‑tax Act.
2. The statement of the case relates to the assessment year 1944‑45, the accounting year ending Kartik Badi Amawas, S. Y. 2000, corresponding to Diwali year 1943.
3. The assessee was a Hindu undivided family carrying on business as shroffs, bankers, merchants and commission agents at various places in India. The assessee had a branch at Bombay where the assessee carried on business in cotton both ready and forward. M/s. Ramjasmal Navrangrai did speculation business in cotton through the assessee till S. Y. 1986‑87, i.e. 1929‑
30. Thereafter, business was done with this party. A sum of Rs. 2,74,580 was due to the assessee by M/s. Ramjasmal Navrangrai as on October 22, 1930. On February 3, 1931, the debtor transferred to the assessee some of their assets including shares for consideration of Rs: 1,72,304 leaving a balance of Rs. 1,03,
176. From Kartak 1988 (1931) till 1998‑99 (1941‑42), i.e. for ten years nothing was realised from the debtor nor was any interest charged by the assessee in the account of the debtor. It was contended by the assessee that the debtor acknowledged the debt from time to time and in support this claim the assessee filed certain letters received from the debtor dated March 10, 1937, and February 25, 1940. These letters are made part of ‑ the case and are marked as Annexures "A" and "B" respectively. It was further contended by the assessee that when the debtor failed to pay the amount due, the assessee was obliged to settle the same in April 1943, for a sum of Rs. 10,
000. As security for the settled amount, the debtor pledged certain gold ornaments. Later on, during the accounting year ending Diwali 1943, the assessee had to sell the ornaments on the debtor's failure to pay the settled amount. The sale proceeds realised on February 21, 1946, amounted to Rs. 10,571‑5‑6 out of which the assessee recovered the settled amount of Rs. 10,000 and refunded the balance to the debtor (date of pledge of ornaments is not on record). When the assessee settled the debt due at Rs. 10,000, the balance of the debt amount ing to Rs. 97,196 was written off as bad and irrecoverable.
4. On these facts, the income‑tax authorities found that the debt had become bad towards the end of S. Y. 1997 and should have been claimed in the relevant assessment year 1931‑
32. The orders passed by the Income‑tax Officer and the Appellate Assistant Commissioner are part of the case and are Annexures "C" and "D" respectively.
5. The finding recorded by the Appellate Assistant Com missioner was challenged on appeal before the Appellate Tribunal. The Appellate Tribunal agreed with the finding recorded by the Appellate Assistant Commissioner and held that the debt should have been claimed as a bad debt in an earlier year. In arriving at this conclusion the evidence which weighed in particular with the Tribunal was the letter of the debtor addressed to the assessee dated March 10, 1937, and also the affidavit of Tulsiram dated December 8, 1948. The letter dated March 10, 1937, is already made a part of the case as Annexure "A" and the affidavit of Tulsiram dated December 8, 1948, is made part of the case and is marked as Annexure "E". The Tribunal observed in their order: " It is clear that the assessee tried to recover as much as he could from the debtor in Samvat Year 1987. It is said that the debtor had some houses left with him in Bhiwani and a rice mill in C. P. Our attention has been drawn to the evidence of Tulsiram, who is one of the proprietors of M/s. Ramjasmal Navrangrai and also to the evidence of R. S. Motilal, the assessee. On Fagan Vad 13th, Samvat year 1993, M/s. Ramjasmal wrote to the assessee as follows: `Rs. 1,03,178‑4‑3 which are due to 3 ou we have given an acknowledgment for the same. We are much particular to send you your rupees but there is no source from where we can get moneys. We could not get moneys in our hands. On receipt of moneys we shall send the same to you.' This letter definitely shows that the debtor was in a hopeless condition after he had transferred the assets to the assessee. Tulsiram in his evidence says that the rice mill was worth Rs. 60,000, but later on he says that in spite of inflated prices it was valued only at Rs. 20,000 in Samvat year 2000‑2001. As for the houses, they were mortgaged for Rs. 7,
000. He does not state when they were mortgaged. He only says that they were redeemed in Samvat year 2000. Looking to the attitude of the creditor, it appears to us that in all probability the houses and the factory were not available for the purpose of paying the assessee's debts. The houses were probably mortgaged and the so‑called factory was not worth very much. We are, therefore, of opinion that the debt became bad towards the end of Samvat year 1987 and should have been claimed as such in the assessment year for which the `previous year' would be Samvat year 1987." Copy of the order of the Tribunal is part of the case and is marked as Annexure "F".
6. The other contention of the assessee was regarding a claim of Rs. 24,400 being legal expenses. The facts relating to this claim are briefly these:
7. In the year 1937‑38 a petition was filed against the assessee by one of his creditors in the district of Ajmer for having the assessee adjudged insolvent under the Provincial Town Insolvency Act. On that petition the Court appointed a receiver for taking charge of the properties and businesses of the assessee. While those proceedings were pending another creditor of the assessee also filed a petition in Bombay in July 1938, to adjudicate the assessee as insolvent. On this petition the Bombay High Court adjudged the assessee as insolvent. During the tendency of these proceedings negotiations were started by the assessee with the creditors for composition of the amounts due to them. An agreement for composition was arrived at with the creditors and sanctioned by the Bombay High Court and their previous order adjudicating the assessee as insolvent was annulled on the 15th April 1941. The claim of the assessee was in respect of the expenditure incurred in resisting the insolvency proceedings on account of fees paid to its attorneys. The bill of costs of the attorneys had been submitted to the assessee but was settled only in September/October 1943. The Tribunal negatived the claim of the assessee on the ground that the expenditure, in any case, did not relate to the year of account relevant to the assessment year under consideration. It was found by the Tribunal that the assessee had ceased to carry on business when its properties and businesses were taken over by the receiver as a result of the insolvency petition in 1938 and till the annulment order passed by the Bombay High Court in 1941. The expenditure was incurred in the course of these insolvency proceedings and the assessee's system of accounting being mercantile the expenditure could be considered as a charge only for 'the years in which it was incurred. the Tribunal, therefore, held that the claim was in any case a belated one. Copies of the orders passed by the Income‑tax Officer, the Appellate Assistant Commissioner and the Tribunal have already been made part of the case as‑ Annexures "C", "D" and "F" respectively.
8. On these facts, as directed by their Lordships we refer the following questions of law for the opinion of the High Court: (1) Whether there was material on which the Tribunal could hold that the debt due from M/s. Ramjasmal Navrangrai of Bhawani had become bad and irrecoverable long prior to the assessment year 1944‑45. (2) Whether there was material on which the Tribunal could hold that the expenditure of Rs. 24,400 claimed as legal expenditure was not admissible under section 10 (2) (xv) of the Indian Income‑tax Act?" If the answer to this question is in the negative: (3) Whether there was material on which the Tribunal could hold that the expenditure of Rs. 24,400 claimed as legal expenditure did not pertain to the assessment year 1944‑45 but pertained to an earlier year?"
9. The statement of the case was placed before the parties. The few minor suggestions made by the assessee were accepted. At the suggestion of the assessee a copy of the statement of Tulsiram dated December 3, 1948, is made a part of the state ment of case and is at Annexure "G". The letter addressed by Messrs. Ramjasmal Navrangrai to the assessee on February 6, 1946, is also made part of the case and is at Annexure "H". A copy of the extracts of the accounts of Messrs Ramjasmal Navrangrai for Samvat year 1999‑2000 is also made part of the case and is at Annexure "1". The assessee suggested that a copy of the affidavit made by Durlabhdas Bhagwandas on June 4, 1951, along with the two statements made before the Income‑tax Officer on December 2, 1948, and January 19, 1949, be made part of the case. The suggestion is accepted and these documents are made part of the statement of case and are collectively at Annexure "J".
10. The Commissioner of Income‑tax admitted that all material facts stated in the statement of the case were correctly stated. It was, however, suggested that statement of the case may be sent to the High Court of Judicature at Jodhpur. The learned counsel for the assessee contended that the question of jurisdiction should best be left for the decision of the High Court and the statement of the case should be sent to the Allahabad High Court inasmuch as their Lordships of the Allahabad High Court have called upon the Tribunal to submit the statement of case to that Court. In the circumstances, we comply with the requisition of the Allahabad High Court and send the statement of the case to the Allahabad High Court. The parties may, if they like, agitate the question of jurisdiction before the High Court.
11. The statement is finalised. R. S. Pathak and V. P. Tiwari for the Assessee. A. L. Gulati for the Commissioner.
Judgment & Decree
There are, however, a few sections which require notice. Section 52 of this Act reads as follows: (52) Jurisdiction of High Courts for new States.‑The High Court for a new State shall have, in respect of any part of the territories included in that new State, all such original, appellate and other jurisdiction as, under the law in force immediately before the appointed day, is exercisable in respect of that part of the said territories by any High Court or Judicial Commissioner's Court for an existing State." The effect of this provision is that the Rajasthan High Court would be the High Court for the district of Ajmer also and that Court would have all such original, appellate and other jurisdictions as were exercisable in respect of the district of Ajmer by any High Court or Judicial Commissioner's Court. The position before the passing of the State Reorganisation Act was that in respect of the income‑tax matters, this Court had jurisdiction over the district of Ajmer and in other matters the Judicial Commissioner of Ajmer had the jurisdiction. The result is that even in tax matters, arising out of areas constituting the Ajmer district, the Rajasthan High Court alone has jurisdiction. But the question that still requires consideration is as to whether that is so even with regard to references called for by this Court and pending before it. In our opinion, such an inference is not deducible from the language of section
52. That is a general provision conferring jurisdiction on the Rajasthan High Court in respect of all cases arising out of the areas constituting the State of Rajasthan but does not deal with the specific matter relating to the decision of pending cases. For pending proceeding, the States Reorganisation Act (hereinafter referred to as Act No. XXXVII) has made separate provisions. It may be noticed that whereas section 64 of Act XXXVII clearly provides for the transfer of certain pending proceedings relating to the areas which were included in the State of Bombay and were by Act XXXVII to merge in the State of Rajasthan to the High Court of Rajasthan, there is no such provision with regard to the income‑tax proceedings pending in this Court. It would contribute to a clear understanding of the point if we reproduce section 64 of Act XXXVII of 1956 in extenso: "(64) Transfer of proceedings to Rajasthan High Court.‑(1) As from the appointed day, the High Court of Bombay shall have no jurisdiction in respect of the territory transferred from the existing State of Bombay, to the new State of Rajasthan. (2) Such proceedings pending in the High Court at Bomba)‑ or the High Court of Madhya Bharat immediately before the appointed day as are certified by the Chief Justice of that High Court, having regard to the place of accrual of the cause of action and other circumstances, to be proceedings which ought to be heard and decided by the High Court for the new State of Rajasthan (referred to in this Act as the High Court of Rajasthan) shall, as soon as may be after such certification, be transferred to the High Court of Rajasthan. (3) All proceedings pending in the High Court of the existing State of Rajasthan immediately before the appointed day other than those certified under subsection (1) of section 61 and all proceedings pending in the Court of the Judicial Commissioner for Ajmer immediately before the appointed day shall stand transferred to the High Court of Rajasthan. (4) Any order made before the appointed day by any Court referred to in subsection (2) or subsection (3) in any proceedings transferred to the High Court of Rajasthan by virtue of sub section (2) or subsection (3) shall, for all purposes, have effect not only as an order of that Court, but also as an order of the High Court of Rajasthan." It is noteworthy that whereas there is a direct provision for the transfer of all proceedings pending before the Judicial Commissioner of Ajmer and before the High Courts of Bombay and Madhya Bharat to the High Court of Rajasthan, there is no provision for the transfer of the income‑tax references pending in this Court to the High Court of Rajasthan. It is well settled that the question relating to the jurisdiction of a Court or Tribunal has got to be determined on the basis of the conditions existing on the date when the suit or the proceedings were started. Thus, if on the date of the filing of the suit or the start of the proceedings a Court had validly entertained the suit or the proceedings it would continue to be seized of it even though later on the area from which the suit or proceeding arises has gone out of the territorial limits of the jurisdiction of that Court. This general rule has an exception the same being that if there is anything contained in any statutory provision to the contrary the question relating to jurisdiction of the Court shall be governed by that provision. The view that we are taking finds support from the decision of the Federal Court in Venugopala Reddiar v. Krishnaswamy Reddiar (A I R 1943 F C 24). In that case a suit was filed in an Indian Court in respect of certain properties some of which were situated in Rangoon. The litigation was still pending when the Burma Independence Act came into force and the question arose whether an Indian Court should decide even in respect of properties situate in Burma. It was contended before the Federal Court that under the municipal law a Court of one State cannot decide in respect of the properties situated in another independent State. But their Lordships held that in view of the fact that the Burma Independence Act did not contain any provision which extinguished the jurisdiction of the Indian Courts in respect of suits already filed relating to properties in Burma, the Indian Courts had jurisdiction in the matter. We have already said above that there is nothing in Act XXXVII which requires either the transfer of the present case or dismissal of the present proceedings on the ground that we have no juris diction to proceed further and we do not see any reason why the rule laid down in Venugopala Reddiar v. Krishnaswamy Reddiar, should not be followed in this case. In this connection we would also like to notice two other provisions in Act XXXVII. Section 123 reads as follows: "
123. Legal proceedings.‑Where immediately before the appointed day, the Union or an existing State is a party to any legal proceedings with respect to any property, rights or liabilities subject to apportionment under this Act, the successor State which succeeds to, or acquires a share in, that property or those rights or liabilities by virtue of any provision of this Act shall be deemed to be substituted for the Union or the existing State as a party to those proceedings, or added as a party thereto, as the case may be and the proceedings may continue accordingly." Section 125 reads thus: "
125. Provisions as to certain pending proceedings.‑(1) Every proceeding pending immediately before the appointed day before a Court (other than a High Court), Tribunal, authority or officer in any area which on that day falls within a State shall, if it is a proceeding relating exclusively to any part of the territories which as from that day are the territories of another State, stand transferred to the corresponding Court, Tribunal, authority or officer in the other State. (2) If any question arises as to whether any proceeding should stand transferred under subsection (1), it shall be referred to the High Court having jurisdiction in respect of the area in which the Court, Tribunal, authority or officer before which or whom such proceeding is pending on the appointed day, is functioning and the decision of that High Court shall be final. (3) In this section‑ (a) proceeding includes any suit, case or appeal; and (b) corresponding Court, Tribunal authority or officer' in a State means‑ (i) the Court, Tribunal, authority or officer in that State in which, or before whom, the proceeding would have lain if the proceeding had been instituted after the appointed day, or (ii) in case of doubt, such Court, Tribunal, authority or officer in that State as may be determined after the appointed day by the Government of that State, or before the appointed day by the Government of the corresponding State, to be the corresponding Court, Tribunal, authority or officer." Two things emerge from the perusal of these two statutory pro visions Firstly, that in connection with all legal proceedings pending on the appointed day, in cases in which the State is a party, substitution shall take place, in order to replace the State which has lost jurisdiction by the State which has acquired jurisdiction in respect of the territories to which; a that proceeding relates and, secondly that all proceedings in a Court other than a High Court shall stand transferred from the Tribunal or authority where they were pending to the corresponding Tribunal or authority of the State to which the areas are being transferred. It is noteworthy that though a suit or an appeal has been expressly included in the expression "proceeding", nothing has been said about a reference under the Act. Neither of these two sections, therefore, apply to proceedings like the one before us. For the reasons mentioned above, we are of the opinion that the objection of the Department is misconceived and this Court has jurisdiction to continue the hearing of this reference. We accordingly overrule the preliminary objection. Coming to the merits, it may be stated that the following three questions of law have been referred to us: "(1) Whether there was material on which the Tribunal could hold that the debt due from M/s. Ramjasmal Navrangrai of Bhawani had become bad and irrecoverable long prior to the assessment year 1944‑45? (2) Whether there was material on which the Tribunal could hold that the expenditure of Rs. .24,400 claimed as legal expenditure was not admissible under section 10(2)(xv) of the Indian Income‑tax Act? (3) Whether there was material on which the Tribunal could hold that the expenditure of Rs. 24,400 claimed as legal expen diture did not pertain to the assessment year 1944‑45 but pertained to an earlier year." The statement of the case relates to the assessment year 1944‑45 and the accounting year ending Kartak Badi Amawas, S. Y. 2000, corresponding to Diwali year 1943. The assessee was a Hindu undivided family carrying on business as sheriffs, ban kers, merchants and commission agents at various places in India. They had a branch in Bombay where they carried on business in cotton both ready and forward. The circumstances in which question No. 1 arises are according to the statement of the case as follows: Messrs Ramjasmal Navrangrai used to carry on speculation business in cotton through the assessee and continued doing so till Samvat year corresponding to 1929‑30 A. D. Where after, they did not carry on any such business with the assessee. A sum of Rs. 2,74,580 was due to the assessee, from Messrs Ramjas mal Navrangrai as on October 22, 1930. In order to meet this debt liability Messrs Ramjasmal Navrangrai transferred to the assessee some assets including shares in incorporated companies for a consideration of Rs. 1,72,304 leaving a debit balance of Rs. 1,03,176 in favour of the assessee. From Kartak 1988 (1931 A. D.) till 1998‑99 (1941‑42 A. D.), i.e., for ten years, the assessee realised nothing from Messrs Ramjasmal Navrangrai. However, later on during the accounting year ending Diwali 1946 certain ornaments were sold for a sum of Rs. 10,571‑5‑
6. Rs. 10,000 of which was recovered by the assessee and tile balance was given over to Messrs Ramjasmal Navrangrai. In the assessment year in question an amount of Rs. 97,196 was written off as bad debt and the question for consideration before the Income‑tax Officer was whether it had become had debt in the year of assessment or in the earlier year. The Income‑tax Officer held that the debt had become bad towards the end of Samvat year 1997 and should have been claimed in the relevant assessment year 1931‑
32. Dissatisfied with the order of the Income‑tax Officer the assessee appealed to the Appellate Assistant Commissioner who did not give him any relief in respect of this matter. The assessee then filed an appeal before the Tribunal but there also he got no relief in respect of this parti cular item. Mr. R. S. Pathak who has appeared for the assessee has strenuously contended before us that the question No. 1 should be answered in favour of the assessee because the Tribunal has based its findings on no material or at any rate it has failed to notice a lot of relevant and material evidence. Our attention was invited to two letters, Annexures "A" and "B". Annexure "A" is a letter dated 10th March, 1937, addressed by Ramjasmal Navrangrai to the assessee. That letter reads as follows: "To Bhai Champalalji Ramswarup at Bombay, read Jai Gopal of Ramjasmal Navrangrai of Bhivani. Received your letter for Rs. 1,03,176‑14‑3 which are due to you we have given an knowledgment for the same. We are much particular to send you your rupees but there is no source from where we can get moneys. We could not get moneys in our hands. On receipt of money we shall send the same to you. Dated Fagan Vad 13th S. Y. 1993." Read Jai Gopal of the writer Tulsi Ram. Annexure "B" is in the following terms: "To Bhai Champalal Ramswarup at Siddha Shri Beawar read Jai Gopal or Ramjasmal Navrangrai from Bhiwani. We have received your letter and noted the contents. You have made a demand for moneys. That is alright. We are aware of the same. We have yesterday sent an acknowledgment note for Rs. 1,03,176‑14‑3 to Bombay. You may note the same. Please write letters and write for work, Dated Fagan Vad and S. Y. 1996. To Bhai Motilalji read Jai Gopal Morulal. Here all are happy; Please inform us about your happiness." It is contended by 14Ir. Pathak that the law is well settled that a debt becomes bad debt only if all hopes of its realisation are lost and so long as there is a hope, however faint it may be, it cannot be said that the amount has become a bad debt". He has relied upon certain decisions in support of this con tention. It is not necessary to notice those authorities in the present case because the question that is before us relates to the application of the principle of law rather than the acceptance of that well recognized principle. Mr. Pathak's submission is that these two documents unmistakably reveal the intention of Ramjasmal Navrangrai to pay the debt and that no reasonable person after receipt of these letters could have reason to believe that the debt had become bad. In this connection, Mr. Pathak also invited our attention to the affidavits filed before the Income‑tax officer by Tulsi Ram and Motilal, as also the statements of Tulsi Ram and Motilal recorded by him. It is contended that these two affidavits and the two parole statements clearly show that the hopes for the realization of this debt had not been lost and it was only after the realization of Rs. 10,000 in the Diwali year 1946 that the assessee could reasonably treat the balance of Rs. 97,1.96 as a bad debt. Mr. Pathak also placed before us Annexure "H", letter dated Magh H. 5, S. Y. 2002 from Ranijasmal Navrangrai to Champalal Ramswarup. The said letter reads as follows: "To Bhai Chamhalalji Ramswarup at Siddha Shri Navnagar. Read Jai Gopal of Ramjasmul Navrangrai from Bhiwani. We had dealings with your Bombay shop sometime hack. Settlement in respect thereof was made for Rs. 10,000, in words ten thousands, and we handed over to you ornaments of about Rs. 10,
000. Our idea was to get back the ornaments oil payment of your moneys but we have not got money. Therefore we are unable to send the moneys so please sell our ornaments and credit the sale proceeds to our account and square up our account. From now there is nothing due from us to you. Dated Magh Vad. 5th S. Y. 2002. Please read Jai Gopal of the writer Marulal with best respects." The Tribunal has taken into consideration the following circumstances in concluding that the debt had become bad or unrecoverable much earlier.
1. Nothing had been recovered from the debtor for ten years; and
2. No interest was debited to the debtor's account ever since Sainvat year 1997. The Tribunal has specifically referred to the statement of Tulsi Ram, the letter dated Phagun, Sainvat year 1993, and the statement of Motilal, the assessee. On the basis of the circum stances and the material mentioned above, the Tribunal recorded a finding that in all probability the houses and the factory belonging to the debtor, Ramjasmal Navrangrai, were not available for the purpose of paying the assessee's debt and "the houses were probably mortgaged and the so‑called factory was not worth very much." The Tribunal, therefore, held that the debt had become bad towards the end of Sainvat year 1987 and should have been claimed in the assessment year for which the previous year would be Sainvat year 1987. It is not possible to say that there was no material son which the Tribunal has based its findings. The Tribunal has clearly mentioned the material, i.e., the statement of Motilal and Tulsi Ram and the letter dated Phagun, Samvat year 1.993, and we have already referred to it earlier. It cannot also be said that when the Tribunal, on the basis of circumstances and pieces of evidence mentioned above, recorded the finding that the debt had become had earlier, it did so arbitrarily, or that its conclusions are such which any reasonable man will not arrive at. We have not very much impressed by the submission of Mr. Pathak that the Tribunal did not consider some other pieces of evidence on the record to which its attention was invited. It is true that during the pendency of the appeal before the Tribunal an affidavit sworn by Durlabhdas Bhagwandas Javeri was filed and there is no specific reference to that affidavit in the order of the Tribunal nor is there a specific reference to the letters, Annexure "B" and Annexure "H". It does not appear that the attention of the Tribunal was ever specifically drawn to these pieces of evidence. The Tribunal was an appellate autho rity and the burden was on the assessee to have satisfied it that the orders passed by the Income‑tax Officer and the Appellate Assistant Commissioner were wrong. It is not the function of the appellate Court or authority to peruse unasked for the record and find out for itself whether the judgment is right or wrong even though no argument might have been addressed to it or no grounds urged to show that the order of the Court below is wrong. The tribunal had to examine the orders of the Income‑tax Officer and the Appellate Assistant Commissioner with a view to find out as to how for the grievances of the assessee against those orders were valid. It was not expected to make a roving enquiry, look into each bit of evidence itself and then come to a finding whether or not the order passed by the Appellate Assistant Commissioner and the Income‑tax Officer are correct. The difference between the approach of an appellate Court from that of a trial Court was explained by their Lordship of the Federal Court in Suraj Narain Anand v. State of North West Province (A I R 1942 F C 3,6), where there Lordships observed as follows: "In theory as well as in practice, there is a well marked differ ence between a decision given by an officer who acts in the consciousness that he is primarily responsible for investigation and decision of the case and the act of one who is expected only to satisfy himself that another officer who had the primary responsibility has properly dealt with the case." It would appear from the judgment of the Tribunal that they have referred to such documents or evidence to which their attention was invited. They have observed as follows while dealing with the evidence of Tulsi Ram and Motilal, assessee: "Our attention has been drawn to the evidence of Tulsi Ram and also to the evidence of N. S. Motilal." No affidavit has been filed before us either section 66(2) application stage or the present stage that even though the attention of the Tribunal was invited to some pieces of evidence, it has ignored them and there is no material on the basis of which we can accept the submission of Mr. Pathak. Far from saying that the conclusion arrived at by the Tribunal are perverse, we have no doubt that on the material on the record the conclusion to which the Tribunal arrived at was one which any reasonable person could have arrived at. Learned counsel placed reliance upon Omar Salay v. Commissioner of Income‑tax ((1959) 37 I T R 151, 170 (S C)) and invited our attention to the following passage in that judgment: "We are aware that the Income‑tax Appellate Tribunal is a fact‑finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it, this Court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the: Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it." We have already mentioned the circumstances and the pieces of evidence on which the Tribunal based its conclusions. It has not even been complained that the Tribunal acted on suspicion or conjectures. The only complaint was that the Tribunal did not notice all the pieces of evidence on the record. We have already mentioned above that it has not been sworn before us that the Tribunal did not notice even those pieces of evidence to which reference was made by the learned counsel for the assessee in arguments before it. We do not find any thing in the decision of Omar Salay's case on the basis of which we can say that the Tribunal has not done its duty in a judicial manner. It has mentioned the circumstances and the pieces of evidence on which it relied and there was thus material in support of its conclu sions. In the absence of there being either a positive allegation or an averment on oath that, even though its attention was invited to every piece of evidence it has not considered it, we cannot hold that the Tribunal has not considered certain pieces of evidence to which its attention was invited. In this connection we may also point out that it has been held that if a point does not find place in a judgment the presumption is that it was not argued before the Court, which gave the judgment (see Lakhmi chand Baijnath v. Commissioner of Income‑tax ((1959) 35 I T R 416). We may also mention that in Bhaichand Amoluk & Co. v. Commissioner of Income‑tax ((1962) 44 I T R 511 (S C)), their Lordships after referring to the earlier decision in Omar Salay v. Commissioner of Income‑tax, were pleased to emphasise that even though the order of the Tribunal must show that it has considered all the points in favour and against the assessee, it is not necessary for it to have examined minutely sentence by sentence so as to discover a minor lapse here or an incautious opinion there to be used as a peg on which to hang an issue of law. In our opinion the order of the Tribunal passed in the present case fulfils the requirements of both the decisions, i.e., Omar Salay and Bhaichand cases. For the reasons mentioned above, we are of the opinion that question No. 1 should be answered in the affirmative. We would now advert to the second question. In view of the decision in Commissioner of Income‑tax v. Jagatjit Distilling and Allied Industries Ltd. ((1961) 41 I T R 328) against which nothing has been shown to us, it must be held that the expenses incurred by an assessee in connection with winding up proceedings including the counsel fee, travelling expenses and other legal expenses should be treated as part of the business expenditure within the meaning of section 10(2)(xv) of the Act. We, therefore, answer the second question in the negative in favour of the assessee and against the Department. With regard to the third question, it may be stated that the assessee claimed Rs. 24,000 as expenses incurred in opposing an insolvency petition in which he was adjudged insolvent in the year 1938 by the Bombay High Court and in executing mortgage deeds relating to the compensation scheme. The expenses were incurred in the period 1938 to 1941. The income‑tax authorities and the Tribunal treated this claim to be a belated one. The submission on behalf of the assessee is that even though the system of accounting maintained by the assessee was the mercantile one, the solicitors not having presented their bills earlier the amount in the bill became due to the solicitors only during the year of assessment. It appears that the solicitors claimed a sum of over Rs. 50,000 and ultimately the amount was settled at Rs. 24,000 and old. Considering the circumstances of the case and the facts as stated by the Tribunal it appears that uptil the time when during the assessment year the ‑bills were finally settled and the amount reduced to less than half the liability of the assessee was more or less a floating one and had not been finally determined. It is true that in the mercantile system of accounting mere accrual of liability is enough for its inclusion in the account but this liability must acrue and in view of the facts and circumstances of the present case we are of the opinion that the liability accrued only during the year of assessment. The amount of Rs. 24,000 odd claimed as expenses cannot be deemed to be as a belated claim. Our attention was invited to Calcutta Co. Ltd. v. Commissioner of Income‑tax ((1959) 37 I T R 1, 10). That was a case where the assessee had bought lands and sold them for building purpose undertaking to provide a drainage system and install lights, etc. When the plots were sold the purchaser paid only a portion of the purchase price and undertook to pay the balance in instalments. The appellants in its turn undertook to carry out the developments within six months but time was not of the essence of the contract. In the relevant accounting year the appellant actually received in cash only a sum of Rs. 29,392 towards the sale price of lands, but in accordance with the mercantile system of accounts adopted by it, it credited in its accounts the sum of Rs. 43,692 representing the full sale price of lands. At the same time it also debited an estimated sum of Rs. 24,809 as expenditure for the developments it had undertaken to carry out even though no part of that amount was actually spent. The Department disallowed the expenditure. The Tribunal confirmed that finding. The question before the Supreme Court was whether the sum of Rs. 24,809, the estimated sum of expenditure, could be claimed. Their Lordships held that it could be claimed though the amount had not been received. Their Lordships observed as follows: "Turning now to the facts of the present case, we find that the sum of Rs. 24,809 represented the estimated expenditure which had to be incurred by the appellant in discharging a liability which it had already undertaken under the terms of the deeds of sale of the lands in question and was an accrued liability which according to the mercantile system of accounting the appellant was entitled to debit in its books of account for the accounting year as against the receipts of Rs. 4 1,692‑I1‑9 which represented the sale proceeds of the said lands. Even under section 10 (2) of the Income‑tax Act, it might possibly be urged that the word expended was capable of being interpreted as expendable or to be expended' at least in a case where a liability to incur the said expenses had been actually incurred by the assessee who adopted the mercantile system of accounting and the debit of Rs. 24.809 was thus a proper debit in the present case." The facts of that case are distinguishable from the facts of the case before us. In that case there was an agreement and on the basis of it an assessment could be made fairly accurately. In the present case, the amount of the bills was not known nor could the amount be approximately calculated by the asssessee. As we have said above from the claim of Rs. 50,000 the solicitors dropped down to cc claim of Rs, 24,000 and odd. The assessee had not acknowledged the liability for the payment of this amount. It was only after the bill had been finally settled during the assessment year that the liability for the payment of the same accrued against the assessee. In the circumstances, we think that, on the facts and circumstances of the present case, question No. 3 must be answered in the negative and in favour of the assessee. We, therefore, answer this question in favour of the assessee and hold that the assessee was entitled to claim the expenditure of Rs. 24,000 in the year under assessment. In view of the fact that the parties have partly succeeded and partly failed, we direct them to bear their own costs. We, however, assess the fee of learned counsel for the Department at Rs. 300.