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2019 (9) TMI 1339 - AT - Income TaxDisallowance towards bad debts written off - AO disallowed the bad debts written off observing that the claim of bad debt due to non-delivery of stock is premature at this stage as final deficiency in amount cannot be arrived at now. He also observed that the case is under investigation and seized assets are yet to be realized and hence the amount cannot be treated as bad - CIT(A) sustained the disallowance - HELD THAT:- It is not in dispute that the assessee company has shown the income from trading as revenue income in its profit and loss account and part of the outstanding amount has been written off as bad debts in its books of accounts. In such circumstances, the decision of the Hon'ble Supreme Court in the case of T.R.F Ltd v. CIT [2010 (2) TMI 211 - SUPREME COURT] squarely apply to the facts of the case. It has been held by the Hon'ble Supreme Court that it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable and it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Since there is no dispute of write off of bad debts in the books of accounts of the assessee, respectfully following the decision of the Hon'ble Supreme Court we hold that the lower authorities are not justified in not allowing the claim for deduction of bad debts. Thus, we direct the Assessing Officer to delete the disallowance made towards bad debts and recompute the income of the assessee. - Decided in favour of assessee.
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