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Commissioner of Income-tax, Bombay City-vi Vs. National Organic Chemical Industries Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Application No. 198 of 1976
Judge
Reported in[1978]115ITR56(Bom)
ActsIncome Tax Act, 1961 - Sections 80J and 256(1)
AppellantCommissioner of Income-tax, Bombay City-vi
RespondentNational Organic Chemical Industries Ltd.
Appellant AdvocateR.J. Joshi, Adv.
Respondent AdvocateF.N. Kaka, Adv.
Excerpt:
.....period could be excluded while computing total income. - - 3. having heard the learned counsel for the revenue and the assessee, we are not satisfied that any question of law, as purposed by the revenue, are arises in view of the decision of the supreme court cited above in which the supreme court, while dealing with the concept of 'debt owed' within the meaning of section 2(m) of the wealth-tax act, has referred to the decision of the calcutta high court and has quoted the following observations with approval from banchharam majumdar v. ' 4. since these observations have been approved by the supreme court, the concept of debt owed and debt due must be taken to have been clearly defined by the decision of the supreme court......of the supreme court cited above in which the supreme court, while dealing with the concept of 'debt owed' within the meaning of section 2(m) of the wealth-tax act, has referred to the decision of the calcutta high court and has quoted the following observations with approval from banchharam majumdar v. adyanath bhattacharjee ilr [1909] cal 936 : 'standing alone, the word 'debt' is as applicable to sum of money which has been promised at a future days as to a sum now due and payable. if we wish to distinguish between the two, we say of the former that it is a debt owing, and of the latter that it is a debt due. in other words, debts are of two kinds : solvendum in praesenti and solvendum in future. whether a claim or demand is a debt or not, is in no respect determined by a reference.....
Judgment:

Chandurkar, J.

1. An application made by the revenue for reference of the following question was rejected by the Tribunal :

'Whether, on the facts and in the circumstances of the case, the tribunal was right in law in holding that for the purpose of rule 19(3) a distinction has to be made between debts owed and debts due and that only debts that had become due for payment as at the end of the accounting period should be excluded while computing the capital for the purpose of section 80J relief ?'

2. The Tribunal has declined to make the reference on the grounds that there is a recognised distinction between 'debts owed' and 'debts due' and accepted the contention of the assessee that only debts that had become due for payment as at the end of the accounting period could be excluded while computing the capital. While accepting the contention of the assessee and rejecting the application of the revenue, the Tribunal; had relied - and in our opinion rightly - on the decision of the Supreme Court in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax : [1966]59ITR767(SC) . Hence this application by revenue to this court.

3. Having heard the learned counsel for the revenue and the assessee, we are not satisfied that any question of law, as purposed by the revenue, are arises in view of the decision of the Supreme Court cited above in which the Supreme Court, while dealing with the concept of 'debt owed' within the meaning of section 2(m) of the Wealth-tax Act, has referred to the decision of the Calcutta High Court and has quoted the following observations with approval from Banchharam Majumdar v. Adyanath Bhattacharjee ILR [1909] Cal 936 :

'Standing alone, the word 'debt' is as applicable to sum of money which has been promised at a future days as to a sum now due and payable. If we wish to distinguish between the two, we say of the former that it is a debt owing, and of the latter that it is a debt due. In other words, debts are of two kinds : solvendum in praesenti and solvendum in future. Whether a claim or demand is a debt or not, is in no respect determined by a reference to the time payment. A sum of money which is certainly and in all events payable is debt, without regard to the fact whether it be payable now or at a future time. A sum payable upon a contingency, however, is not a debt or does not become a debt, until the contingency has happened.'

4. Since these observations have been approved by the Supreme Court, the concept of debt owed and debt due must be taken to have been clearly defined by the decision of the Supreme Court. Since the principle with regard to the construction of the words 'debt due' and 'debt owed' is now settled by the Supreme Court, we do not think any question of law which needs to be referred to this court arises. Rule discharged with costs.


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