Gokal Chand Mital, J.
1. M/s. Ganpat Rai Banarsi Dass (hereinafter called the assessee) had business dealings with M/s. Laxmi Narain Cotton Mills Ltd., Calcutta. During the assessment year 1970-71, the assessee effected sales to the cotton mills to the tune of Rs. 2,91,748. Out of the sale price, Rs. 1,97,372 had been paid through cheques by the cotton mills on various dates between April 23, 1969, and November 4, 1969. Out of the cheques, one cheque of Rs. 12,000 was dishonoured with the result that Rs. 1,06,375 were recoverable by the assessee from the cotton mills.
2. The assessee tried its level best to realise the aforesaid amount but in vain. Ultimately, the cotton mills were taken over as a sick textile undertaking under the Sick Textile Undertakings (Nationalisation) Act, 1974. In the assessment year 1971-72, the assessee claimed deduction of Rs. 75,000 as a bad debt. The assessee did not get any relief from the Income-tax Officer and its appeal before the Appellate Assistant Commissioner also remained unsuccessful. The matter was taken in further appeal by the assessee to the Income-tax Appellate Tribunal (hereinafter called the Tribunal). The Tribunal, vide order annexure 'E' dated October 30, 1976, granted relief to the assessee in regard to Rs. 75,000 as a bad debt after recording a finding on appreciation of facts of the case that a reasonable inference can be drawn that it has become difficult or impossible torecover the said amount from the cotton mills. It was also held that it was legally impossible for the assessee to recover its dues from the cotton mills as the mills had been taken over as a sick textile undertaking under the Sick Textile Undertakings (Nationalisation) Act, 1974, and, therefore, there was almost no chance for the recovery of Rs. 75,000. Against the aforesaid order, the Commissioner of Income-tax filed an application for reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter called 'the Act'), before the Income-tax Appellate Tribunal, Chandigarh, which application was rejected by order dated February 2, 1977, on the ground that no question of law arose for referring the matter to this court and pure questions of fact were involved. Feeling aggrived, the Commissioner of Income-tax has come to this court under Section 256(2) of the Act seeking mandamus.
3. After hearing the learned counsel for the parties and on perusal of the record, we are in agreement with the Tribunal that no question of law arises in this case. Out of Rs. 1,06,375, a sum of Rs. 75,000 was claimed as a bad debt from the cotton mills, which became a sick textile undertaking and was taken over as such under the Sick Textile Undertakings (Nationalisation) Act, 1974. The Tribunal has recorded a finding on consideration of the facts on record that they reasonably point to an inference that, having regard to the circumstances of the debtor, it has become difficult or impossible to recover. Hence, no case is made out.
4. For the reasons recorded above, the application is dismissed with no order as to costs.