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2009 (4) TMI 361 - HC - Income TaxBad Debts- Writing off debts- “Whether the appellate authorities were correct in holding that for the purpose of writing off of bad debts it was not essential to square off each individual account of every debtor and it would be sufficient if the debit entries are made into the profit and loss account and conesponding credit is made in a bad debt reserve account contrary to the provision of the Act and especially the Explanation to clause (vii) of section 36(1) of the Act brought into effect from April 1, 1989, by the Finance Act, 2001?” Held that- there was a clear finding of fact by the Assessing officer that the provision for “non-performing assets” created by the assessee and deduction of provision for non-performing assets out of advances did not amount to writing off of debts. The Tribunal was not justified in holding that it was not essential to square off each individual account of every debtor and it would be sufficient if the debit entries were made in the profit and loss account and corresponding credit entries were made in a bed debt reserve account.
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