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2013 (10) TMI 1070 - AT - Income TaxValidity of writing off bad-debts after the end of financial year - Whether the decision by the management of the debt/s becoming bad, though made subsequent to 31.03.2008, is based on evidence/s or event/s prior or subsequent thereto – Held that:- In the case evidence is post 31.13.2008, the assessee's claim would be valid only where the event/s enables assessment of the position as obtaining on 31.03.2008, and not otherwise. The nature of the events or the account behavior post the year-end (31.03.2008) would, therefore, require being examined to see if they have in any manner influenced the decision for the impugned write off. A decision guided by the said event/s, being after the year-end, could only be recognized after its occurring, while where it is reflective of a state of affairs as at the year-end, the entry would relate back to the year- end. Reliance in this context is drawn to Accounting Standard (AS) 4 [Contingencies and Events occurring after the Balance-Sheet date] issued by the ICAI, also relied upon by the assessee. Where there are no such circumstances, so that the decision for write off is based on the events up to the relevant year-end (31.03.2008), the fact of passing the entries after the said date, becomes irrelevant. Matter being essentially factual, is accordingly restored to the file of the first appellate authority to decide the same in light of our foregoing observations, by issuing definite findings of fact, and after hearing the parties, including on the satisfaction of s. 36(2) (qua the claim for bad debts).
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