Commissioner of Income Tax vs Aspinwall and Co. (Travancore) Ltd.

T.L. Viswanatha Iyer, J.—We do not find any question of law arising out of the order of the Tribunal. Admittedly, the Mambad Rubber Manufacturing Company Ltd., owed large amounts to the assessee. That company had huge accumulated loss besides owing large amounts to the Canara Bank which was insisting on repayment of the said amount. Since there was no scope for getting repayment of the amounts due, the assessee obtained certain shares in lieu of the amount due, which it subsequently sold to certain persons incurring loss in the process. The capital loss was disallowed by both the assessing authority and the Commissioner (Appeals) on the ground that the transactions entered into by the assessee smacked of a scheme or ruse to avoid payment of tax. This was, however, reversed by the Tribunal, who considered the matter elaborately from various angles and came to the conclusion that far from being any scheme or ruse to avoid payment of tax falling within the principle of the decision in McDowell and Co. Ltd. Vs. Commercial Tax Officer, , this was a case where the assessee genuinely attempted to salvage whatever they could get from the defaulter company, which was virtually insolvent. The Tribunal has approached the matter not merely from the angle of the conversion of the amount due into shares but also from another angle in which it has been pointed out that the amount due to the assessee could easily have been written off as bad debt and claimed as business loss, The order of the Tribunal is a well reasoned one based on the material. We do not find any infirmity or illegality in the said order justifying reference of any question for determination of this court.

This petition is, therefore, dismissed.