TMI Blog2008 (4) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... has directed that disallowance of bad debt be deleted. Third Member Order - The interpretation of section 36(1)(vii) of the Act was considered by this court in CIT v. Morgan Securities and Credits (P.) Ltd.[ 2006 (12) TMI 106 - DELHI HIGH COURT] . In that case, this court referred to the circular as well as another decision of the Gujarat High Court being Deputy CIT v. Patidar Ginning and Pressing Co.[ 1999 (10) TMI 727 - GUJARAT HIGH COURT] and came to the conclusion that no substantial question of law arises for consideration. It has also been brought to our notice by learned counsel for the respondent that if an assessee writes off a debt as a bad debt without giving any reason, he will not get any benefit from this. This is for the reason that by virtue of section 41(4) of the Act, where a deduction has been allowed in respect of a bad debt which is irrecoverable and if the amount or a part thereof is subsequently recovered, then that amount shall be deemed to be profits and gains of business or profession of that relevant previous year. Learned counsel for the revenue submits that the 1989 amendment incorporates only the year of allowability but it does not dispens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 36(2) were fully satisfied. Please see CIT v. T. Veerabhadra Rao, K. Koteswara Rao Co. [ 1985 (7) TMI 2 - SUPREME COURT] . I have also carefully considered the reasons given by the learned Accountant Member in his proposed order for remanding the case back to the Assessing Officer. In the first four paras he records the findings of the ld. CIT (Appeals) that assessee failed to produce the relevant evidence in support of its claim that cheques by the parties were dishonoured and secondly despite proper opportunity given by the lower authorities, the assessee did not file copies of the relevant suits filed in Court to enable lower authorities to verify the relevant facts. I have already noted above that the assessee, before the learned CIT (Appeals), had claimed that proper opportunity was not given to it by the Assessing Officer. As regards the non-filing of copies of action taken by the assessee against debtors, even the learned Accountant Member has noted that copies of proceeding taken against the debtors were duly filed before the lower authorities. Therefore, the statement made in the order of the CIT (Appeals) is not correct. Reason No. (iii) in Accountant Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd. where the debtor was a Government agency and had shown its willingness to pay the debt. In spite of above fact, the debt was written off in post date and claimed as bad . The facts involved here are quite distinguishable and there is nothing on record to show that debtors were ready to pay or had in fact paid any amounts to the assessee or the judgment of writing off of debt suffers from any mala fide. There is nothing on record to contradict the claim of the assessee that not a penny had been recovered by the assessee from the debtors till this day. Having noted the facts of the case, I hold that there was no justification for remanding the case back to the file of the Assessing Officer. The learned Judicial Member was right in disposing of the matter on merit and I agree with his proposed order. The matter should now be placed before the regular Bench for disposal in accordance with law. - Vimal Gandhi President , I. P. Bansal J.M. And B. R. Kaushik A.M. For the Appellant : Anil Jain For the Respondent : Ms. Indira Aiyer , R. K. Paliwal ORDER DECEMBER, 2007 This appeal by the assessee has been filed against the order of learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement was arrived at whereby the party made payment of a large part of the outstanding amount and the balance amount of Rs. 1,54,610 was written off as irrecoverable debt, which was allowable under s. 36 of the Act; and (v) the relevant books of accounts were not readily traceable. 5. The AO observed that : 1. the relevant books of accounts were not produced for verification; and 2. relevant details were not submitted to ascertain the period for which the debts in question had remained outstanding and whether the same were taken into account for determining taxable income of any preceding year. 6. The AO, therefore, rejected the entire claim of Rs. 85,69,350 as bad debt for the reason that the assessee had failed to furnish any evidence in support of its claim. 7. The learned CIT(A) examined the issue in detail as per discussion in para 5 at pp. 6-10 of his order. The findings of the learned CIT(A) are summarized below : (a) The amount of Rs. 85,69,350 claimed as bad debt by the assessee comprised of principal and the interest thereon; (b) As per provisions of s. 36(1)(vii) of the IT Act, deduction was to be allowed in respect of the bad debt written off as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 910 stated to be given on lease in asst. yr. 1999-2000; (iii) Atul Glass Ltd., New Delhi for lease charges for asst. yrs. 1998-99 to 2000-01 for the GD set of Rs. 40 lakhs given on lease during the period relevant to asst. yr. 1997-98. Thus the CIT(A) allowed the claim of bad debt of Rs. 5,00,682 and rejected the rest of the claim for the reason that the assessee could not file evidence in support of its claim that the charges given by the parties were not honoured and it was noticed by him that there was considerable recovery of bad debts. 8. The learned counsel reiterated the submissions taken before the lower authorities and maintained that : (i) the entire claim of bad debts of Rs. 85,69,350 was required to be allowed because the amount was written off as irrecoverable in the books of account of the assessee; (ii) in view of amendment to s. 36(1)(iii) of the IT Act w.e.f. 1st April, 1989 the assessee was not required to prove that the debts had become bad; (iii) as per Circular No. 551 dt. 23rd Jan., 1990 [(1990) 82 CTR (St) 325 : (1990) 183 ITR (ST) 7], the claim of bad debt was to be allowed in the year of write off; (iv) since the genuineness of the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale cheques of Rs. 58,689 appearing in sundry creditors as income of the appellant company under s. 41(1). (b) The CIT(A) without any basis erred in holding that the creditors have written off the debt. (c) The CIT(A) erred in upholding the addition without even adhering to the provisions of s. 41(1). 12. The facts, in brief, are that it was observed by the AO from the details of sundry creditors filed by the assessee on 9th Feb., 2004 that an amount of Rs. 58,689 was appearing against the head Stale cheques . The assessee was required to explain as to why the amount of Rs. 58,689 should not be treated as income under s. 41(1) of the Act because of cessation of liability. He was also required to file the dates of issue of cheques, the names of the parties to whom the cheques were issued and details of transactions with these parties during the year. The assessee did not submit any reply and the amount of Rs. 58,689 was added by the AO as income of the assessee under s. 41(1) of the Act. The learned CIT(A) upheld the addition for the reasons that : (i) the cheques issued by the assessee were not encashed; (ii) the assessee had the capacity to pay the liabilities in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were considered stale in this year by the assessee itself as shown in its books of account of the accounting period under consideration and the amount in question have been rightly taxed as income of the previous year; (iv) the learned CIT(A) very fairly directed that the appropriate action should be taken in the assessment of the subsequent year in which the amount had been offered to tax; and (v) with due respect the decision of the Hon'ble apex Court in the case of CIT vs. Sugauli Sugar Works (P) Ltd. (1999) 152 CTR (SC) 46 : (1999) 236 ITR 518 (SC) did not apply on the facts of the case of the assessee, in view of the fact that the assessee had himself admitted that the liability had ceased to exist and the amount was offered to tax in subsequent year and thus, the only issue before us is as to the year when the liability ceased to exist, which in our considered opinion, as discussed above, is this previous year. We, therefore, see no reason to interfere with the decision of the learned CIT(A). This ground of appeal is accordingly rejected. 15. The third ground of appeal is reproduced below : (a) On the facts and circumstances of the case the learned CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and tear, the difference between the book value on repossession and the revaluation as per physical appraisal was taken as diminution in the value of assets as per the prevailing system of hire purchase accounting. According to the AO, the assessee failed to produce before him the valuation report or any other evidence in support of his claim that the value had decreased to Rs. 19 lakhs. He, therefore, rejected the claim of the assessee and added the amount of Rs. 13,34,586 to the income of the assessee. The assessee as per its letter dt. 3rd Nov., 2004 placed at pp. 1 to 7 of the paper book further contended before the learned CIT(A) that : (i) the repossession of assets was effected by the assessee in July, 1998 as per terms of the hire purchase agreement dt. 17th Dec., 1996; (ii) the value of the re-possessed assets was shown in the books of account of the assessee at Rs. 32,34,586 being the cost of the assets as reduced by the principal recovered till the date of repossession; (iii) pending settlement of the dispute with the party, the value of stock on hire has been shown constantly at Rs. 32,34,586 since July, 1998; (iv) since neither the dispute was resolve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch a situation even if the tippers were re-possessed as per claim of the assessee, the tippers could not be considered stock-in-trade because the tippers were never intended to be sold and the tippers re-possessed did not cease to be the capital asset of the assessee. Since the tippers had neither been given for lease during July, 1998 to 31st March, 2001 nor put to use by the assessee, the depreciation could not be claimed and the value of tippers in the balance sheets remained unchanged. The issue has not, thus, been examined properly by the lower authorities. This issue is, therefore restored to the AO with the direction that he should re-examine the claim of the assessee in view of the foregoing observations and decide the issue afresh after giving proper opportunity to the assessee. This ground of appeal is treated as allowed for statistical purpose. 23. The appeal of the assessee is, therefore partly allowed as per discussion above. I.P. BANSAL, J.M. : 09-01-2008 I have gone through the draft order passed by the Hon'ble AM in which the issue regarding bad debt has been restored to the file of AO. I have discussed this issue with him, but I could not per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se equipments rental income was shown. After August, 1998 the aforesaid company started making default in payment and cheques were also bounced. A settlement was reached with the said party on the basis of which the balance amount of Rs. 1,54,610 was written off and thus the same is allowable as bad debts. 4. Considering these submissions AO disallowed the entire amount of Rs. 85,69,350 by making observations that no books of account were produced for verification of accounts for this purpose and no details were filed and since these amounts were outstanding or as to whether such amounts were offered for taxation in any preceding years. Thus holding that the assessee has failed to furnish evidence in support of his claim the amount was disallowed. The amount was agitated in appeal filed before CIT(A). CIT(A) has called for remand report dt. 15th March, 2005 of the AO, a copy of which is placed at pp. 18 to 20 of the paper book. The report of the AO in respect of each party is as under : (1) SMS Construction, Udaipur : The said party had entered into an agreement with the assessee in the asst. yr. 1997-98 for purchase of Hitachi excavator and Tata tippers. The hire purchase fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 in asst. yr. 1997-98. The income arising out of this lease transaction was booked in asst. yrs. 1998-99 to 2000-01. The cheques which were issued by the party bounced and accordingly legal suits were stated to be filed under s. 138 of Negotiable Instruments Act. Assessee did not file copy of suit for verification. 5. After considering the remand report of the AO the learned CIT(A) vide para 5.3 has decided the issue party-wise as under : (1) SMS Construction, Udaipur : The claim of the assessee in respect of other amount is eligible for deduction @ Rs. 2,50,341 per year as similar income was shown in asst. yrs. 1998-99 and 1999-2000. (2) Haryana Steel Alloys Ltd., Sonepat : According to the evidence submitted, the Punjab National Bank memorandum does not contain any specific details to confirm that cheques bounced and no bill discounting charges are booked for the year under consideration. Thus the claim is not allowable. (3) Rama Paper Mills Ltd., Kiratpur, UP : No specific confirmation for the cheques bounced has been submitted by the assessee i.e. in the shape of bank memorandum and thus no right of claim can be allowed. 6. In respect of the following three p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration or in earlier years. The claim of the assessee is denied only on the basis that the assessee did not furnish copy of suit filed by it against those parties. In my opinion, non-furnishing of copy of suit is not relevant to decide that whether or not bad debts claimed by the assessee are allowable. According to s. 36(1)(vii) subject to the provision of s. (2), the amount of any bad debt or part thereof which is written as irrecoverable in the account of the assessee for the previous year is an allowable deduction. The proviso to s. 36(1)(vii) applies to bad and doubtful debts relating to schedule banks etc. According to Expln. 2 to s. 36(1)(vii) such bad debts which are written off will not be allowable if it is a provision for bad and doubtful debts made in the case of the assessee. Allowability is subject to restriction, placed in s. 36(2) which reads as under : 36(2) In making any deduction for a bad debt or part thereof, the following provisions shall apply' (i) no such deduction shall be allowed unless such 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each debt has been underlined in the above part of this order. Thus according to s. 36(2) also the assessee fulfills the conditions of allowability of bad debt as there is material on record to show that the debts which have been considered to be bad and are written off in respect of which income have been taken into account either in previous year relevant to relevant assessment year or in earlier previous years. If the bad debt is falling under the category of s. 36(2) and is written off in the books of account i.e. debited to P L a/c then after amendment w.e.f. 1st April, 1989, the assessee need not to prove that such bad debt had in fact become bad only during the relevant previous year under consideration. The position of law in this regard has been explained in the decision of Hon'ble Delhi High Court in the case of CIT vs. Morgan Securities Credits (P) Ltd. (supra). Circular No. 551 dt. 23rd Jan., 1990 [(1990) 82 CTR (St) 325 ] leaves no scope for the debate since it specifically notices the previous practice of having two establishments with a debt had become bad in previous year, which had generated enormous litigation on the question of allowability of bad debt in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of Rs. 64,17,960. The AO took up the assessment and issued notice under s. 143(2) on 29th Oct., 2002. During the course of assessment proceedings, the assessee, as per letter dt. 21st Oct., 2003 claimed that the Hon'ble Bombay High Court vide order dt. 4th July, 2003 directed amalgamation of the assessee company with its holding company M/s Zuari Industries Ltd., Goa. According to the assessee, the AO thereafter was not sure whether assessment was to be made by him or by the AO at Goa assessing the holding company. Only somewhere in January, 2004, the concerned CIT directed that assessment for the year under consideration be made by the AO at New Delhi. Thereafter the AO wrote letters dt. 19th Feb., 2004 and 27th Feb., 2004. Extracts from the above letters are reproduced in the assessment order. In response to the above letters, the assessee had pointed out that for making claim of bad debt, it was not necessary that assessee should have filed case against the debtor and wait till the said cases were decided. A bad debt is to be allowed on the basis of decision of management that the same had become bad. The assessee pointed out that cheques issued by parties had bounced. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with assessee for hire purchase in asst. yr. 1997-98 for purchase of Hitachi excavator and Tata tippers. The hire purchase finance charges were accounted in asst. yrs. 1998-99 and 1999-2000. The hire purchase charges accounted in asst. yr. 1999-2000 amounted to Rs. 2,50,341. The cheques issued by the party bounced and party defaulted in payment of hire purchase instalments. The legal suits were stated to be filed under s. 138 of Negotiable Instruments Act before the Court of Addl. Sessions Judge, Patiala House, New Delhi. The assessee has not furnished copy of the suit filed, for verification.' I am of the opinion that only to the extent the income was taken into account in computation and confirmed by the Authorised Representative's report would be eligible for deduction. Assessment year 1998-99, 1999-2000 @ Rs. 2,50,341 i.e. Rs. 5,00,682. Haryana Steel Alloys Ltd., Sonepat : 'Bills raised on this party were discounted in the year 1999-2000. The details of the bills discounted and discount charges accounted as income is given in the statement No. 1. This party has issued 11 cheques towards the bill discounting amount which bounced in asst. yr. 1999-2000 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued by the party bounced and accordingly legal suits were stated to be filed under s. 138 of Negotiable Instruments Act before the Court of Addl. Sessions Judge, Tis Hazare Courts, New Delhi. However, copy of the suit filed is not furnished for verification.' The claim of the appellant that cheques bounced is not supported by any bank memorandum. In view of which the claim for write off cannot be allowed. It is to be noted that in all cases where appellant has himself had offered to explain the write off on the basis of bounced cheques but not supported with bank memorandum it becomes a case where the appellant himself corroborate the basis of his claim for the write off. Also it is noticed in the P L a/cs that there was considerable recovery of bad debts. The total write off allowed therefore amounts of Rs. 5,00,682 only. 4. The assessee being aggrieved impugned above order in appeal before the Tribunal and reiterated its claim. The submissions are noted by the learned AM who proposed the leading order. He has directed that the matter should be set aside and restored to the file of the AO to consider evidence filed by the assessee. The operative portion of learned AM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of Hitachi excavator and Tata tippers. The hire purchase finance charges were accounted in asst. yrs. 1998-99 and 1999-2000. The hire purchase charges accounted in asst. yr. 1999-2000 amounted to Rs. 2,50,341. The cheques issued by the party bounced and party defaulted in payment of hire purchase instalments suit under s. 138 of Negotiable Instruments Act was filed in the Court of Addl. Sessions Judge, Patiala House, New Delhi. Assessee did not file copy of suit for verification. (2) Haryana Steel Alloys Ltd., Sonepat : Bills raised on this party were discounted in the year 1999-2000. The details of the bills discounted and discount charges accounted as income were also furnished by the party and the said party had issued cheques towards the bill discounting amounts which bounced in asst. yr. 1999-2000 and legal suits were stated to be filed under s. 138 of Negotiable Instruments Act before the Court of Addl. Sessions Judge, Patiala House, New Delhi. Assessee did not file copy of suit for verification. (3) Rama Paper Mills Ltd., Kiratpur, U.P. : The party was leased effluent treatment plant for lease amount of Rs. 32,40,625 in asst. yr. 1997-98. The income arising o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of each party relating to which bad debts have been written off, income was accounted for either in the year under consideration or in the earlier years. The said portion has been highlighted in the proposed order. In the opinion of the learned JM, non-furnishing of copy of suit was not relevant to decide whether or not bad debt claimed by the assessee are to be allowed. The learned JM, thereafter referred to provision of ss. 36(1)(vii) and 36(2). He has again observed that in the remand report, it has been clearly mentioned by the AO that in respect of each debt income has been taken into account, either in the previous year or in the earlier year. Thus conditions of s. 36(2) were satisfied and bad debts were allowable. He has held, there is material on record to show that the debts have been considered to be bad and are written off in respect of which income have been taken into account either in the previous year or in earlier previous years . The learned JM in the proposed order further opined that bad debt falling under the category of s. 36(2), if written off in the books of account, is to be allowed as a deduction after amendment of the relevant provision w.e.f. 1st April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credits (P) Ltd. (supra) that the assessee even after the amendment, has to prove that the writing off of the bad debt was bona fide. In this case, question of bona fide could not be examined as the assessee did not produce relevant information before the AO or CIT(A). Therefore, remand of the matter on facts and circumstances of the case was fully justified. The learned Departmental Representative further relied upon decision of Hon'ble Madras High Court in the case of South India Surgical Co. Ltd. vs. Asstt. CIT (2006) 201 CTR (Mad) 289 : (2006) 287 ITR 62 (Mad) wherein their Lordships have held that assessee is to establish that bad debts are bona fidely written off to claim the deduction. Therefore, finding to the above effect was required to be recorded. He further submitted that on some other issues, the CIT(A) remanded the case back to the AO. While framing fresh assessment on those issues, the question of bad debt can also be examined by the AO without causing any prejudice to the assessee. The learned Departmental Representative accordingly supported the proposed order of the learned AM. 8. In rebuttal the learned counsel for the assessee Shri Anil Jain agued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the Tribunal has power to remand a case for further investigation of facts but such power has to be exercised with proper discretion and it should not be exercised if all the basic facts necessary for the disposal of the matter are already on record and further if these facts appear in the order of the lower tax authorities. (3) In the case of Maharani Kanak Kumari Sahiba vs. CIT (1955) 28 ITR 462 (Pat)'Remand should only be made in very rare cases and should be used sparingly and only in cases where the Tribunal, after examination of material already placed on record by way of evidence, takes a view that it is not possible for it to make a just order. Surinder Pal Verma vs. Asstt. CIT (2004) 83 TTJ (Chd)(TM) 24 : (2004) 89 ITD 129 (Chd)(TM). (4) In the case of Karnataka Wakf Board vs. State of Karnataka AIR 1996 (Kar) 55 at pp. 63 and 64, it has been held that : Where the party had an opportunity of adducing evidence in the case but with open eyes failed to adduce that evidence, the case should not be remanded to give a second chance to the party to adduce that evidence. The policy of the law is that once that matter has been fairly tried between the parties, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Tribunal to have another inning, particularly when such party had full opportunity to establish its case. Unnecessary remands, when relevant evidence is on record, belies litigant's legitimate expectations and is to be deprecated. Having regard to aforesaid principle, it is necessary to look into records to see whether there is sufficient material on record to dispose of the issue on merit and there is no need to remand the issue to provide a fresh inning to the Revenue. 11. Before proceeding to examine the evidence on record, it is necessary to bear in mind the principle laid down by jurisdictional High Court for examining question of allowability of bad debt under s. 36(1)(vii) of IT Act after its amendment w.e.f. 1st April, 1989. In the case of Morgan Securities Credits (P) Ltd. (supra), their Lordships laid down as under : A conjoint reading of s. 36(2) and s. 36(1)(vii) makes it clear that the assessee would be entitled to a deduction of the amount of any bad debt which has been written off as irrecoverable in its accounts for the previous year. Any lingering doubt would vanish on a careful reading of Circular No. 551, dt. 23rd Jan., 1990 [(1990) 82 CTR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... later an altogether different Bench of the Gujarat High Court had to decide the question of whether it was enough if the assessee writes off the debt as bad in its books of account and whether the assessee company need not establish the debt to have become bad, in Dy. CIT vs. Patidar Ginning Pressing Co. (1999) 157 CTR (Guj) 177. The appeal of the Revenue was dismissed. It is our view that the Circular No. 551 leaves no scope for debate since it specifically notices the previous practice of having to establish that a debt had become bad in the previous year, which had generated enormous litigation on the question of allowability of bad debt in a particular year. The circular expressed the hope that this litigation would be eliminated by permitting a debt to be treated as a bad or irrecoverable no sooner it was written off in the books of the assessee concerned. In these circumstances no substantial question of law arises in the present case. Dismissed. 11.1 The aforesaid decision was again applied by their Lordships of Delhi High Court in the case of Autometers Ltd. (supra). After noting the change made in the statutory provision w.e.f. 1st April, 1989, their Lordships obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke the situation to what was prevailing pre 1st April, 1989. Taking all these factors into consideration, we are of the opinion that no substantial question of law arises for our consideration. The appeal is dismissed. 11.2 In my considered opinion, principle laid down by their Lordships have been correctly appreciated by the learned JM in the proposed order. The net effect of change made in the statutory provision w.e.f. 1st April, 1989 is that it was necessary for the assessee to establish that debt had become bad in the previous year before amendment, whereas now for debts to be classified as 'bad', the assessee has only to write it off as 'irrecoverable' in its accounts. If subsequently any part of written off debt is recovered, the same would be charged to tax by virtue of s. 41(4) of the IT Act. In holding that deduction of bad debts were rightly claimed, the JM held that conditions of s. 36(1)(vii) and of s. 36(2) were fully satisfied in this case. There is no dispute as far as writing off of bad debt is concerned. The learned JM further noted and underlined relevant portion of the remand report dt. 15th March, 2005 of the AO wherein he had clearly sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had furnished details of bad debt vide letter dt. 19th Feb., 2004. It was again fixed on 27th Feb., 2004 and on that very date, the assessment order was passed. The learned CIT(A) accepted that proper opportunity was not given. The assessee, therefore, placed further evidence before the learned CIT(A) and on that, CIT(A) asked for a remand report. The relevant portion of the remand report has been noted above. 12.1 As regards the non-filing of copies of action taken by the assessee against debtors, even the learned AM has noted that copies of proceedings taken against the debtors were duly filed before the lower authorities. Therefore, the statement made in the order of the CIT(A) is not correct. 12.2 Reason No. (iii) in AM's order that the assessee could not establish that written off debts had not been taken into account for determining the income of previous year, as required by s. 36(2) is also factually and legally incorrect. This point has been discussed in detail in this order, how income of the debts written off was taken into account in the previous year or in earlier assessment years and that conditions of s. 36(2) are fully satisfied in this case. 12.3 Reas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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