Judgment

GROVER, J.: These appeals by certificate arise out of a common judgment of the Calcutta High Court in two income tax References.

2. The assessee is a private limited company. It carried on the business of banking and financing as also of managing agency. Starch Products Ltd. was one of the various companies which was being managed by the assessee. Starch Products had appointed the U. P. sale Corporation Ltd. as its selling agent. The assessee claimed to have stood guarantee for a loan of Rs. 6 lakhs which was advanced to the U. P. Sales Corporation Ltd. by the Gwalior Industrial Bank Ltd. The borrower failed to pay the loan which on August 2, 1948 stood at Rs. 5,60,199/-. This amount was paid by the assessee pursuant to the guarantee. Thereafter the assessee treated the U. P. Sales Corporation Ltd. as its debtor for the aforesaid amount. That company went into liquidation and as the assessee could not recover anything from it a sum of Rs. 5,60,199/- was written off in the books of the assessee company. The claim was not entertained either by the Income tax Officer or the Appellante Assistant Commissioner. Before the Income tax Officer the said amount was claimed as bad debt,