JUDGMENT :- (P.JYOTHIMANI, J.) 1. This tax case appeal filed by the assessee pertains to the assessment year 1992-1993 and is against the order the Appellate Tribunal dated 23.9.2004 made in ITA No.2367/Mds/1995. 2. The appellant is admittedly an agent of a non-resident shipping company. The assessee's claim of bad debts to an extent of ` 2,72,420/- came to be rejected by all the authorities, including the Tribunal in the impugned order, against which the tax case appeal has been filed and is admitted on the following substantial questions of law: "1. Whether the Tribunal is correct in concluding that the disallowance of the claim of deduction of bad debt/business loss in the computation of taxable total income by the lower authorities was justified? 2. Whether the Tribunal is correct in concluding that the disallowance of bad debt/business loss was justified on the reason that the amount was not paid by the appellant in the course of its normal business?" 3. The issue involved in this case is covered by a series of judgments of the Supreme Court in Commissioner of Income Tax v. Abdullabhai Abdulkadar, [1961] 41 ITR 545 and Indian Aluminium Co. Ltd v. Commissioner of Income Tax, [1971] 79 ITR 514, wherein it has been categorically held that in respect of the non-resident principal, the tax paid by the agent cannot be treated as bad debt. 4. The Tribunal has correctly considered that the assessee, being the agent of the non-resident tax payer, when it had paid the tax, the same cannot be claimed as a bad debt. The tax itself has been recovered lawfully in accordance with the provision of Section 173 of the Income Tax Act, 1961 (for brevity, "the Act"), which is as follows: 'Section 173. Recovery of tax in respect of non-resident from his assets. The tax itself has been recovered lawfully in accordance with the provision of Section 173 of the Income Tax Act, 1961 (for brevity, "the Act"), which is as follows: 'Section 173. Recovery of tax in respect of non-resident from his assets. Without prejudice to the provisions of sub-section (1) of section 161 or of section 167, where the person entitled to the income referred to in clause (i) of sub-section (1) of section 9 is a non-resident, the tax chargeable thereon, whether in his name or in the name of his agent who is liable as a representative assessee, may be recovered by deduction under any of the provisions of Chapter XVII-B and any arrears of tax may be recovered also in accordance with the provisions of this Act from any assets of the non-resident which are, or may at any time come, within India." 5. Section 36 of the Act relates to other deductions. Sub-section (1)(vii) to Section 36 of the Act, which is as follows: "Section 36. Other deductions: (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- (vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year enablesthe claim of deduction in respect of any bad debts which relate to the accounts of the assessee. 6. Section 37(1) of the Act, which is as follows: "Section 37. General (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head ‘Profits and gains of business or profession’. Explanation. Explanation. “For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.", makes it abundantly clear that it must be exclusively for the purpose of the business of the assessee. 7. It is not as if the appellant, being the agent of the non-resident tax payer, has paid tax on behalf of the principal in the course of its normal business. It is only based on the contractual obligation between him and the principal, the amount of tax was paid in accordance with law. Therefore, there is no question of treating the same as bad debt. As stated above, it is to be reiterated that the Supreme Court has specifically held such amount cannot be declared as bad debt. In such view of the matter, the substantial questions of law are answered in favour of the Revenue and consequently, we have no hesitation to hold that the appeal is totally misconceived. Accordingly, the appeal stands dismissed. The appellant is directed to pay cost of Rs.2,500/- to the Chief Justice Relief Fund within a period of four weeks.