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2015 (4) TMI 836 - CALCUTTA HIGH COURT

2015 (4) TMI 836 - CALCUTTA HIGH COURT - TMI - Debt written off - Whether can be allowed to be deducted either in the assessment year 1980-81 or during the year 1984-85 as claimed by the assessee? - Held that:- Considering the assessment in the year 1980-81 is also open in the sense that the reference is pending before us, we think proper course would be to permit the bad debt in the assessment year 1980-81 itself. Any other view would involve the assessee in unnecessary prejudice. As of date, n .....

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t of further tax and interest. - ITR No. 2 of 2005, ITR No. 8 of 2005 - Dated:- 7-4-2015 - Girish Chandra Gupta And Arindam Sinha,JJ. For the Petitioner : Mr J P Khaitan, Sr. Adv. Mr P Bag, Adv. Mr P Jhunjhunwala, Adv. & Mr A K Dey, Adv. For the Respondents : Mr R K Sinha, Adv. Md Nizamuddina, Adv. ORDER The court : Briefly stated, the questions of law being the subject matter of this reference, arise out of the facts and circumstances as follows:- "The assessee has been trading with Me .....

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eign buyer was declared insolvent on 14th April, 1980 though the proceedings had started on 26th July, 1979. The amount was actually written off on 30th September, 1979 corresponding to assessment year 1980-81. The deduction on account of bad debt, however, was not allowed on the ground that the assessee had failed to establish that the debt had become irrecoverable. The assessee, in the circumstances, once again claimed deduction in the assessment year 1984-85 which was also disallowed. In both .....

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t in the case of Karamsey Govindji vs. CIT reported in (1957) 31 ITR 953. What had happened in that case was that the assessee had advanced a sum of ₹ 70,000/- to a film producer without security in 1945 and 1946. The amount was written off by him as bad debt in November, 1947. The debtor was adjudicated insolvent in July, 1948. There was evidence to show that before the amount was written off by the assessee, the debtor had produced a film and the writing off took place even before the de .....

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ssee extremely difficult. He may write off a debt in a particular year and may claim it and the claim may be disallowed. In the next year he cannot make that claim because it would be urged against him that he did not write off the debt in that year. Therefore, the assessee always finds himself on the horns of a dilemma and it is the duty of the Department to take a sympathetic view of the matter if in fact the debt was never recovered. Therefore, if the debt was not allowed to the assessee in t .....

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ds as follows:- "(iii) any such debt, or part of debt may be deducted if it has already been written off as irrecoverable in the accounts of an earlier previous year, but the Income-tax Officer had not allowed it to be deducted on the ground that it had not been established to have become a bad debt in that year." The provisions appearing in Clause (vii) of Sub-section 1 of Section 36 requiring the assessee to satisfy twin conditions namely to write off the debt and to establish that t .....

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