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2017 (3) TMI 31 - AT - Income TaxAddition with respect to written off of bad and doubtful debts reserve - Held that:- The ledger accounts of each individual account holder/company whose outstanding loan amount have been written off during the relevant period were filed before the Assessing Officer during the remand proceedings. The Assessing Officer in remand report instead of verifying the same has reiterated his objection that the Board Resolutions have not granted absolute mandate to write off the bad debts to the assessee, and has laid a condition that the bank has right to recover the amount in future, if possible. The Revenue has not brought on record any material to show that the assessee has in fact recovered any of the amounts written off in subsequent assessment years or the accounts declared as bad debts were actual live or being capable of being realized. As in the case of TRF Ltd. Vs. Commissioner of Income Tax (2010 (2) TMI 211 - SUPREME COURT ) has held that after amendment of section 36(1)(vii) w.e.f. April 1, 1989 for claiming deduction in relation to bad debts, it is not necessary for the assessee to establish that debt in fact has become irrecoverable. The deduction is allowable if bad debts are written off as irrecoverable in the account of the assessee. One of the objection raised by the revenue against writing off of bad debts reserve is that the income of the assessee was exempt up to assessment year 2006-07 on account of deduction u/s. 80P of the Act. As is evident from the impugned order the assessee had suo-moto created a provision for bad and doubtful debts since 1985-86 on regular basis. While computing the income the assessee claimed entire amount as exempt u/s. 80P up to assessment year 2006-07. Merely because the assessee had claimed the benefit of deduction u/s. 80P it cannot be inferred that the benefit of section 36(1)(vii) is not available to the assessee in the subsequent years when the assessee is not eligible to claim deduction u/s. 80P of the Act. The Revenue has not placed on record any material to show that the provision created by the assessee on account of bad and doubtful debts during the period when the assessee was eligible to claim deduction u/s. 80P was in any manner appropriated. Thus the Commissioner of Income Tax (Appeals) by giving a well reasoned and detailed findings has rightly deleted the addition with respect to written off of bad and doubtful debts reserve. - Decided in favour of assessee
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