1. The question that arises on this reference is whether a certain amount is an allowable deduction under section 10(2) (xv) of the Income-tax Act or in any event it is a business loss which can be deducted for the purpose of ascertaining the true profits of the assessee.

2. The assessee is a commission agent and he along with one Kishorilal borrowed a sum of Rs. 1,00,000 from a bank on joint and several liability. Rupees 50,000 out of this sum were taken by the assessee for his business and Rs. 50,000 were taken by Kishorilal. Kishorilal failed to meet his obligation and was adjudicated insolvent. Therefore under the joint and several liability the assessee had to pay to the bank the whole amount of Rs. 1,00,000. In the insolvency of Kishorilal the assessee received a sum of Rs. 18,805 and he therefore claimed the balance of Rs. 31,740 for the assessment year 1951-52, after taking into consideration certain interest and insolvency expenses and the Tribunal held that this was a permissible deduction under section 10(2) (xv) or in any event it was a business loss which was allowable as a deduction in computing the profits of the assessees business.

3. Certain specific findin