Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2019 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (2) TMI 331 - HC - Income TaxDisallowance u/s 36(1)(vii) and the other u/s 37 - dis-allowance of bad debts especially when the assessee had not taken any steps to recover the said debts and had merely stated it to be bad debts which were again receivable from a subsidiary company - Held that:- As the words existing prior to 01.04.1989, there as an obligation on the assessee to establish the bad debt claimed for the previous year, whereas by the amendment any bad debt or part thereof, which is written off as irrecoverable in the accounts of the assessee for the previous year is eligible for deduction. Hence, the legislature has cautiously left it to the prudence of the assessee to determine whether the debt is bad or not. We see that the Tribunal has looked at the financial figures as available in the previous year of the assessee-company as also the subsidiary company. The subsidiary company was in absolute financial stringency and there was no possibility of any recovery from that company. We do not see any question of law arising from the aforesaid issue, since the Tribunal had looked into the facts and found that the claim of bad debts cannot be said to be one which is made merely for absolving the tax liability. The financial figures on the subject year of the assessee-company and the subsidiary company commend such declaration of bad debts. We also do not agree with the AO's finding that the advance amounts was in pursuance of a financial transaction. The assessee had made the advance to the subsidiary company for execution of job works, which is permissible under Section 37. - Decided in favour of the assessee
|