Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (11) TMI 133 - AT - Income TaxDisallowance of 50% of bad debts - addition towards disallowance of bad debts u/s.36(1)(vii) r.w.s. 36(2) on the ground that the assessee has failed to file any evidences to show debts really become bad and has made sufficient efforts to recover the outstanding debts - HELD THAT:- Assessee has not placed any evidences to prove that income pertains to debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee. On the other hand, the AO had also not examined the issue in light of provisions of Section 36(1)(vii) r.w.s. 36(2) because the AO has made adhoc disallowance of 50% debt The issue needs to go back to the file of the AO to decide the issue afresh in accordance with provisions of Section 36(1)(vii) r.w.s 36(2) of the Act. We further direct the AO while deciding the issue, he must take into account the ratio laid down in the case of T.R.F. Limited [2010 (2) TMI 211 - SUPREME COURT] where it has been clearly held that once debt has been written off in books of accounts as irrecoverable, then the assessee need not to prove that said debt become really bad debts. Accordingly, we set aside the issue to the file of the AO and direct him to reconsider in light of our observations given herein above. Appeal allowed for statistical purpose.
|