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PETITIONER: MADAN GOPAL BAGLA
Vs.
RESPONDENT: THE COMMISSIONER OF INCOME-TAX,WEST BENGAL.
DATE OF JUDGMENT: 08/05/1956
BENCH: BHAGWATI, NATWARLAL H. BENCH: BHAGWATI, NATWARLAL H. DAS, SUDHI RANJAN (CJ) AIYYAR, T.L. VENKATARAMA
CITATION: 1956 AIR 571 1956 SCR 551
ACT: Income-tax-Allowable deduction-Timber business-Surety to third party-Bad debt-Capital loss or business loss-Indian Income -tax Act, 1922 (XI of 1922), s. 10 (2) (xi).’
HEADNOTE: The appellant who was a timber merchant obtained a loan from the Bank of India on the joint security of himself and a third party, M. On the same day M obtained a loan from the Imperial Bank of India on the joint security of himself and the appellant. M failed in his business and the Imperial Bank of India realised the amount of the loan from the appellant who after getting some dividends from the receivers, wrote off the balance as bad debt in the assessment year in question and claimed it as an allowable deduction under s. 10 of the Indian Income-tax Act, 1922 on the footing that it was in the course of securing finances for the business of timber that he stood surety with M and that it was the usual custom to secure loans on the joint security from Banks by persons carrying on busi...