TMI Blog2006 (11) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities disallowing the bad debts in case of (1) M/s. Neo Mar Ltd. Of Rs.81,529/- and (2) M/s. Modern Woolen Mills Ltd. Of Rs.21,463/- in spite of the fact that under provisions of section 36 of the Income-tax Act, 1961 there is no requirement for determining the basis for which the payment have not been made by the debtors to the assessee? 2. Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holding that the sum of Rs.1005105/- being the sale consideration of spare parts supplied to party in Poland could not be considered as 'export turnover' within the meaning of section 80HHC of the Income-tax. Act, 1961? 2. The main issue raised by the learned counsel for the applicant in the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it is also correct that for the purpose of claiming deduction on account of bad debt all debts cannot be termed as bad debts. Irrespective of their possibility of recovery it was not the object of the statute that all debts are allowable as bad debts. The decision of the Tribunal, supra relied upon by the departmental representative supports the same view. Further, we find that with regard to the two debts, the debtors did not clear their dues due to certain differences with regard to the transactions between the parties. Hence, in our opinion, the finding recorded by the first appellate authority is correct." 4. Heard learned counsel for the parties. 5. Clause (vii) of sub-section (1) of Section 36 of the Income Tax Act, 1961, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no infirmity in the order of the Tribunal and we answer the first question against the assessee. 7. However, we make it clear that if the bad debt is not allowed in that particular year and if the assessee shows that the amount of debt has become bad in some other subsequent year, he can approach the concerned authority for deduction on account of bad debt of the amount claimed here. 8. The next issue which has been considered by the Tribunal is `whether the assessee is entitled for deduction under Section 80HHC in respect of the goods which were purchased from some country and exported from that country to some other country'. Can it be said that it amounts to export and the assessee is entitled for deduction under Section 80HHC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the aforesaid two provisions together, it would be clear be clear that the sale proceeds of such goods or merchandise exported out of India by the assessee in convertible foreign exchange is to be termed as export turnover. The opening word of Section 80HHC reads as follows :- "80HHC.Deduction in respect of profits retained for export business.- (1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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