MUHAMMAD ZAHOORUL HAQ, J.-1. The following question has been referred to us under section 66(1) of the Income Tax Act by the Commissioner of Income Tax:-- "Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in allowing a sum of Rs. 17,07,853 as bad debts under section 10(2)(xi) of the Income Tax Act in the year 1970-71."
2. The relevant facts are that the assessee Company had claimed a sum of Rs. 17,07,853 as bad debts for the years 1968-69, 1969-70 and 1970-71. The same had Been disallowed upto the year 1970-71. By the Income Tax Officer, but the Appellate Tribunal allowed the adjustment of the same for the assessm ent year 1970-71 as admissible deduction against the property. The Company had actually written off this amount as bad debts in August, 1967 which was owed to them by one K.L.
Saha, who was their Commission Agent. It was only on 21-3-1968 that a suit against the said K.L.
Saha was filed by the respondent Company and they obtained a decree against him on 24-6- 1969. The proceedings in execution could not be taken as the appellant's staff and the lawyers advised that no further action was possible because the party had left for India without leaving sufficient assets to effect the recovery. A certificate had also been obtained from the Town Committee regarding the departure of the defaulter and about his assets and an independent enquiry had also confirmed the findings of the respondent's local staff.
3. The Income Tax Officer had not allowed the claim as a business loss on the ground that there was a connivance on the part of the personnels of the Company and wilful lapse to recover the amount from the so-called defaulter.
4. The Tribunal held that even if there was any bungling on the part of the local staff, the respondent's bona fides could not be questioned as far as the nature of the debts was concerned on the basis of judicial pronouncements and that the debts could not be written off till 1969, when the execution of the decree was found to be an impossibility. But they allowed it as admissible deduction for 1970-71.
5. We are of the opinion that the view of the Appellate Tribunal in appeal could be justified on the basis that the respondent had filed a suit for the recovery of the amount, but had failed to recover the same on account of the lack of assets of the debtor, who had left for India. The decision of the Tribunal is essentially based on facts and the view that the Tribunal has taken is one which could be arrived at in the circumstances of the case. The question is, therefore, answered in the affirmative and this I.T.C. Is disposed of.