9911796707
TMI Blog2013 (7) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... that decision to write off bad debt, physically and actually, was not taken in the relevant previous year by the respondent and the account cannot remain open for an indefinite period was rejected. In the connected Appeal No.17 of 2009, the Revenue has assailed the judgment and order dated 25.9.2008 passed by the Income Tax Appellant Tribunal. This Court has admitted the instant appeal on the following substantial questions of law:- (1) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that assessee can keep his accounts open for an indefinite period and pass an entry at a later stage even after 12 months from the closure of the accounting period? (2) Whether on the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended on 31.3.2004. (ii) That the audit for the period 1.4.2003 upto 31.3.2004 could only be finalized after the closure of financial year that is after midnight of 31.3.2004. (iii) That when the audit is to be taken up for finalization by the auditors after the closure of the financial year, i.e. after the midnight of 31.3.2004, any decision by the AUDITORS to reconcile, audit, pass rectification entry (if any), passing of journal entry in the Books, any correction by the auditors, or decision regarding debit of expenditure or any outgoing or credit of any income or receipt, accounting of any asset or liability different from what the assessee has already done, can and shall only be taken after 1.4.2004. Hence whether any decision for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Appellate Tribunal and the Tribunal came to the conclusion that there is no requirement in law under Section 36 (1) (vii) of the Income Tax Act that the amount should actually be written off before the end of the financial year. Relevant provisions of Section 36 (1) (vii) read as under:- "36 (1) ............... (vii) subject to the provisions of sub-section (2), the amount of [any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year]" On perusal of the provisions here-in-above, it reveals that the only requirement for allowing the bad debt under Section 36 (1) (vii) of the Income Tax Act is that any bad debt or part thereof is written off as irrecoverable and secondl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board of Directors and not adopted by the shareholders as per the Companies Act, it is legally permissible to make adjustments before they are finally adopted. Further, it is admitted that the original return, on the basis of unaudited accounts, was filed on 1.11.2004. After audit had taken place and report of the Auditors was accepted, revised return was filed on 18.8.2005 and it is only in the revised return, the debts to the tune of Rs.2 crores and odd had been declared as bad. The ground taken by the Assessing Authority and Appellate Authority for not accepting the said bad debts during the assessment year under consideration, i.e. 2004-05 is contrary to the provisions of Section 36 (1) (vii) of the Income Tax Act and further in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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