Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2013 (9) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (9) TMI 958 - HC - Income TaxAllowance of Bad-debts u/s 36(1)(vii) of the Income Tax Act – Evidence to be presented before A.O. - The assessee has turnover of more than Rs.19 crores, and had filed return of income, declaring income of Rs. 1,64,80,293/-. The amount of Rs. 11,52,901/-, which has been written off as bad debt, and could not be recovered was mostly from departments, which are government/semi government entities – Held that:- There is no requirement to establish that debts has become irrecoverable in the accounts of the assessee for the previous year. Sub section (vii) of Section 36 (1) of the Act provides for allowing deductions subject to 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. There is no requirement under sub section (2) of Section 36 of the Act that assessee should produce evidence before the AO that he has made sufficient effort to recover the amount. As a prudent business man in carrying out business and maintaining accounts, the reasons for which the amount, which was actually written off as irrecoverable, is not subject to scrutiny by the AO, unless and until there was some material, which could suggest that writing off debt as irrecoverable was not for bonafide purpose or that the assesee was in fact suppressing the income to be taxed – Decided against the Revenue.
|