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2015 (10) TMI 1874 - AT - Income TaxDisallowance of advances given to transporters - whether it is provision and not actual written off in books of account though advances given during the normal course of business? - Held that:- It is an undisputed fact that during the year under consideration, the Assessee had debited a sum under the head “provision for bad debts” and had claimed it as deduction. It is also an undisputed fact that the amount were not written off in the books of accounts in the year under consideration. According to Section 36(1)(vii), the Assessee can claim deduction of the amount of any bad debt or part thereof only of the portion which is written off as irrecoverable in the accounts of the Assessee subject to provisions of Section 36(2) of the Act. In the present case, since the Assessee has not written off the amount in the books of accounts, we are of the view that the amount was rightly disallowed by A.O and therefore find no reason to interfere with the order of ld. CIT(A). With respect to allowing the deduction in subsequent years, Before us, ld. A.R. has submitted that the amount which were claimed as “provision for bad debts” were in fact have been written off in subsequent years and in subsequent year, when the same have been written off in A.Y. 08-09, Assessee has not claimed the deduction in A.Y. 08-09 and therefore Assessee should not be denied the claim altogether. The aforesaid submission of the Assessee needs a factual verification. We therefore restore the issue back to the file of A.O and direct him to consider the allowability of deduction of bad debts on the facts and circumstances of the case and in accordance with law. - Decided in favour of assessee for statistical purposes.
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