At least write the code without the bushy tree:
#!/bin/bash
PASSED=$1
if [ -d "${PASSED}" ]
then echo "${PASSED} is a directory";
elif [ -f "${PASSED}" ]
then echo "${PASSED} is a file";
else echo "${PASSED} is not valid";
exit 1
fi
When I put that into a file "xx.sh" and create a file "xx sh", and run it, I get:
$ cp /dev/null "xx sh"
$ for file in . xx*; do sh "$file"; done
. is a directory
xx sh is a file
xx.sh is a file
$
Given that you are having problems, you should debug the script by adding:
ls -l "${PASSED}"
This will show you what ls
thinks about the names you pass the script.