TMI Blog2016 (1) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... al answered in the negative. - Decided against revenue - ITA No. 128 of 2006 - - - Dated:- 11-1-2016 - Girish Chandra Gupta And Asha Arora, JJ. For the Appellant : Ms. Asha G. Gutgutia, Adv For the Respondent : Mr. J. P. Khaitan, Sr. Adv. Mr. Ananda Sen, Adv. Mr. Biswajit Mal, Adv ORDER The Court : The appeal was admitted on 16th May, 2006. The questions proposed by the appellant and admitted are as follows:- 1. Whether, on the facts and in the circumstances of the case, the ld. Tribunal has erred in upholding the order of the Commissioner of Income-tax (Appeals) without considering that the conduct of the assessee towards claiming bad debt was not bonafide and honest as the amount shown as bad debt was never show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stock-in-trade. The assessee took up the matter before the C.I.T., Appeal. The appeal was allowed by the C.I.T.(A) holding, inter alia, as follows:- 11. As per Section 36(1)(vii) read with Section 36(2), bad debt is allowable as deduction if the four conditions therein are fulfilled (i) the debt or loan should be in respect of business carried on by the assessee, (ii) the debt should represent money lent in the Ordinary course of money lending or banking or should have been taken into account in computing the income of the assessee of the accounting year or of an earlier accounting year, (iii) the amount of debt or loan should have become bad and (iv) the amount should be written off as irrecoverable in the accounts of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business income. Thus, it is clear from the facts brought on record that the assessee was also doing money lending business apart from business of manufacturing of iron and steel items. Thus, the basic reason on which the Assessing Officer has disallowed the claim of bad debt fails. 11. Regarding the observation of the Assessing Officer that the debt was already bad in earlier year. We agree with the submission of the Ld. Counsel on this issue that this is not relevant for allowing the claim after the amendment of section in the provisions of the Act with effect from 01-04-89. Hon ble Gujarat High Court in the case of CIT Vs Girish Bhagwatprasad (2002) 256 ITR 772 (Guj.) has held that Under the provisions of section 36(1)(vii) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erable in the accounts of the assessee for the previous year]. This submission is incorrect because without such writing off in the previous year, the matter could not have come up before the assessing officer. She then submitted that the amount remained unrecovered during the years prior to the previous year. At that time the assessee did not treat it as bad debt. To that, the answer is that the assessee is entitled not to treat the amount as bad debt so long as he entertains a belief that the money can be recovered. Law does not require him to treat any amount as bad debt once he becomes apprehensive about recovery thereof. This Court held in Coates of India (Supra) that it has to be an honest judgment of the assessee and not a conve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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