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2016 (10) TMI 159 - AT - Income TaxAllowability of deduction on account of ‘write off’ of bad debts - Held that:- Section 36(2)(i) of the Act allows deduction on account of satisfaction of any of one of the two conditions; namely (a) bad debts or part thereof taken into account in computing the income of the assessee for an earlier assessment year before such date or part thereof is ‘written off’ or (b) the debts represents money lend in the ordinary course of business of bank or money lending which is carried on by the assessee. Therefore even if one of the two conditions of section 36(2)(i) is satisfied, then bad debts claimed u/s.36(1)(vii) has to be allowed. So far as first part of section 36(2)(i) of the Act is concerned, in the present case it is assessee’s submission that the amount of ₹ 5,13,088/- represents the sale of waste and scrap which was credited to the P&L A/c. in the year of sale. We find that no details of the year of sale has been furnished by the assessee either before AO or ld.CIT(A) or before us. Assessee has merely made a submission that the amount represents sale. Similarly, as far as the assessee’s claim of having given advance payment for purchase of raw-material of ₹ 11,56,495/- is concerned, no details of the same have been furnished by the assessee. Further, in the present case, assessee has not furnished details in support of its contention of having fulfilled the conditions specified u/s.36 of the Act for claiming deduction. We find that Hon’ble Supreme Court in the case of TRF Ltd.(2010 (2) TMI 211 - SUPREME COURT ), has observed that after the amendment of section 36(1)(vii) w.e.f. 01/04/1989 in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt in fact has become irrecoverable and it is enough if the bad debts ‘written off’ as irrecoverable in the accounts of the assessee In the present case, we are of the view that in the interest of justice, the assessee be granted one more opportunity to place on record about the satisfaction of the required conditions for claiming deduction of “write off”. We therefore restore the issue to the file of AO to decide the issue afresh - Decided in favour of assessee for statistical purposes.
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