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2016 (2) TMI 734 - AT - Income TaxAddition on account of bad debt - CIT(A) deleted the addition - Held that:- In this case their lordship referred to the Circular no. 551 dated 23.01.1990 of the CBDT and held that the amendment made to Section 36(1)(vii) of the act was a decision taken to eliminate litigation with regard to establishing their lordship what is bad debt further observed if the assessee writes off a debt as to bad debt without giving any reason he will not get any benefit from this as by virtue of Section 41(1) of the Act where a deduction has been allowed in respect of a bad debt which is irrecoverable but the amount or a part thereof is subsequently recovered then that amount shall be deemed to be profit and gains of business or profession of the relevant year. However, we may point out that the amendment of year, 1989 incorporates only the year of allowability but does not dispenses with the requirement of the assessee to prove that the debts has become a bad debt. In the present case, the assessee submitted party-wise detail, copies of the invoices/ bills raised against the debtors and other relevant documentary evidence to prove that the amounts was incorporated as revenue receipts and offered as income in the earlier financial year. The assessee also submitted copies of the e-mails and other correspondence with the debtors showing that the conscious and sincere efforts made by the assessee company towards recovery of impugned amounts and the assessee also submitted relevant copies of the ledger accounts and other evidence to show that the claimed debts has become bad and the same was properly submitted before the assessing officer during assessment proceedings. On the basis for foregoing discussion, we reach to a conclusion that the claim of the assessee supported by the required documentary proof about the offering the same income in the earlier financial year and efforts of the assessee for recovery as well as the intention of the assessee to treat the amounts of debts as bad debts. Thus, the issues is squarely covered in favour of the assessee by the ratio laid down by Hon’ble Apex Court in the case of TRF Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT] and hence we hold that the CIT(A) rightly granted to relief to the assessee. We are unable to see any valid reason to interfere with the impugned order and thus we confirm the same. - Decided against revenue
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