( 1 ) ON an application under Section 256 (2) of the Income-tax Act, 1961, this court had directed the Tribunal to refer the following questions set out at page No. 1 of the paper book :"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the bad debt of Rs. 2,42,006 in the name of Shalimar Works Ltd. written off during the year was not an allowable deduction in the computation of income from business ?" ( 2 ) WHETHER, the finding of the Tribunal that the debt of Rs. 2,42,006 relating to Shalimar Works Ltd. had become bad and irrecoverable during the previous year is based on any wrong principle of law or ignoring the relevant materials ?" 2. In compliance with the direction the aforesaid questions are referred for our opinion with the statement of the case. ( 3 ) THE relevant assessment year is 1981-82. During the course of assessment, the Assessing Officer noticed that a sum of Rs. 2,42,006 was due from Shalimar Works Ltd. and the assessee had written off that amount and claimed it as bad debt in this year. The Assessing Officer has rejected the claim of the assessee. According to him though the assessee is an unsecured creditor the assessee has not produced any evidence that the official liquidator has rejected the claim of the assessee. ( 4 ) IN appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has considered the claim of the assessee and allowed the claim of the assessee. The relevant finding of the Commissioner of Income-tax (Appeals) reads as under :"on going through the facts of the case, I am inclined to agree with the contention of the appellant in this regard. After once a company enters into liquidation proceedings, obviously on account of its failure to make payment of its debts, it becomes virtually impossible for the unsecured creditors to recover any amount out of the debts from the said company. After once a company enters into liquidation proceedings, obviously on account of its failure to make payment of its debts, it becomes virtually impossible for the unsecured creditors to recover any amount out of the debts from the said company. In the instant case, since the company was wound up under the order of the High Court during the relevant accounting year and since in the face of the circumstances as discussed above, the company cannot be said to have any chance to recover even a portion of its dues, the dues concerned can rightly be considered to have become bad during the relevant year. I, therefore, allow the claim of bad debt of Rs. 2,42,006 from Shalimar Works Ltd. for the assessment year 1981-82. " ( 5 ) IN appeal before the Tribunal, the Tribunal has restored the view taken by the Assessing Officer and concluded its finding in this regard in paragraph 10 of its order which reads as under :"10. We have considered the submissions of both the parties and are inclined to agree with the learned Departmental Representative that the assessee has not brought any material to show that the debt has become bad. It is not clear whether the assessee has filed the claim before the official liquidator at all and if at all filed, the results thereof. The amount paid by the Government on taking over Shalimar Works Ltd. is also not made available to us. Similarly, the quantum of secured creditors and unsecured creditors is also not available. Therefore, in view of these facts, we hold that debt has been written off prematurely and without taking any steps for its recovery. Hence, we hold that the Commissioner of Income-tax (Appeals) is not justified in deleting the same and we reverse his order on this point. " ( 6 ) DR. Pal, learned counsel for the assessee, submits that as the debtor M/s. Shalimar Works Ltd. had gone into liquidation and wound up there was no scope for recovery. Therefore, the board has taken a decision to write off the loan which is due from Shalimar Works Ltd. He further brought to our notice in the case of Turner Morrison and Co. Therefore, the board has taken a decision to write off the loan which is due from Shalimar Works Ltd. He further brought to our notice in the case of Turner Morrison and Co. Ltd. v. CJT , the financial aspect of Shalimar Works P. Ltd. has been considered and it was found that after payment of the secured loan due from Shalimar Works P. Ltd. nothing remains to be paid to the unsecured creditors. When this view has been taken by this court there is nothing wrong in the claim of the assessee as the amount due from Shalimar Works Pvt. Ltd. has become bad debt. ( 7 ) THIS court in the case of Turner Mormon and Co. Lid. v. CIT, tomes to a finding at page No. 727 regarding the financial position of Shalimar Works P. Ltd. and what is the possibility of recovery of loan in case of an unsecured creditor the relevant finding reads as under :"in the present case, undoubtedly Shalimar Works P. Ltd. at the relevant time was a subsidiary of the assessee and this company was wound up because of the orders passed by this court and all the assets of the company were purchased by a wholly owned company of the Government of West Bengal for a sum of Rs. 74,00,000 and the entire amount went to the secured creditor with the result that undoubtedly the assessee had no chance of recovering the amount in question from the aforesaid subsidiary. " ( 8 ) WHEN this court while considering the possibility for recovery of loan in case of unsecured creditors found that the entire amount went to the secured creditors and nothing remains to be paid for unsecured creditors, there is no justification to deny the claim of the assessee. Therefore, following the aforesaid finding of this court regarding possibility of the recovery of loan of unsecured creditors when there is no chance the assessee has rightly written off that debt treating it as a bad debt. ( 9 ) IN view of the aforesaid finding, the Tribunal has committed an error. ( 10 ) IN the result, we answer question No. 1 in the negative, i. e. , in favour of the assessee and against the Revenue. ( 9 ) IN view of the aforesaid finding, the Tribunal has committed an error. ( 10 ) IN the result, we answer question No. 1 in the negative, i. e. , in favour of the assessee and against the Revenue. ( 11 ) AS there was no finding of the Tribunal that the debt had become bad, question No. 2 is misconceived and we decline to answer the same. ( 12 ) THE reference so made stands disposed of accordingly.