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2013 (10) TMI 70 - ALLAHABAD HIGH COURTAllowability of Bad-debts u/s 36(1)(vii) of the Income Tax Act - Onus to prove that deduction as bad-debts is allowable – Held that:- The only objection raised by the department is that the debt has not become bad as there is still hope to recover the amount. The said approach in view of the peculiar facts of the present case is not justified - Assessee took out the proceedings to recover the amount by sale of the properties of the debtors unsuccessfully is indicative of the fact that the debt has become bad in absence of any plea of collusion or bad fate of the assessee. Other ground taken by the Tribunal is that the assessee has not proceeded against the guarantors - One of the guarantors is Sri Anand Srivastava. The guarantee was invoked through a letter to the District Magistrate, Bareilly. However, Sri Anand Srivastava could not be located and was not traceable. The theory that Sri Anand Srivastava is not traceable was discarded as he happened to be son of Sri G.P. Srivastava, an IAS officer of U.P. cadre. There is nothing on record to show that the outstanding dues could have been recovered from the guarantors or the guarantors were available. If the assessee corporation which is State owned corporation in its wisdom resolved to write off the debt treating it as a bad debt, in view of its inability to recover the amount from the District Authorities, there is sufficient compliance of section 36(1) (VII) of the Act - There is sufficient evidence on record to hold that the outstanding dues have become bad debts and it cannot be realised – Decided in favor of Assessee.
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