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2016 (5) TMI 239 - ITAT DELHI

2016 (5) TMI 239 - ITAT DELHI - TMI - Disallowance of bad debts - Held that:- Section 36(1)(vii) was amended w.e.f. 1.4.1989 and as per the amended provision of clause (vii) of section 36(1) of the Act, subject to the provisions of sub-section (2) of section 36, the amount of any bad debts or part thereof which is written off as bad debts as irrecoverable in the accounts of the assessee, the provisions shall be allowed. Hence, the basis of disallowance adopted by the AO is perverse and misconcei .....

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he previous year and there was no requirement to establish this fact that the debts have become bad debts in the previous year after 1.4.1989 there was no requirement to show and efforts of recovery and to establish that the debts have become debts despite of sincere and all possible efforts of the assessee. - Decided in favour of assessee - ITA No. 6047/Del /2013 - Dated:- 18-3-2016 - Shri G. D. Agrawal, Vice President And Shri Chandra Mohan Garg, Judicial Member For the Appellant : Smt. Rashmi .....

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isposed off. Hence on 3.3.2016, when this error was noticed by us, we passed a corrigendum order and directed that the name of this appeal be deleted in the cause title of the order dated 19.2.2016 [supra] and this appeal of the Revenue would be decided by passing a separate order. Copies of the said order and corrigendum order have been kept in the file of this appeal for ready reference. 3. The sole ground raised by the Revenue is with regard to the addition of ₹ 2,80,82,006/- made by th .....

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e. The assessee carried the issue before the ld. CIT(A) who allowed the appeal of the assessee by deleting the addition. Now the aggrieved Revenue is before this Tribunal by raising the sole ground as raised hereinabove. 5. We have heard the arguments of both the sides and carefully perused the relevant material placed on record before us. The ld. DR strongly supported the action of the AO and contended that huge amount as bad debts cannot be allowed when the assessee had written off the same wi .....

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submitted that after 1.4.1989, it is not necessary for the assessee to establish the debts, in fact, has become irrecoverable. It is enough if the bad debts are written off as irrecoverable in the accounts of the assessee. 7. On careful consideration of the above and from the assessment order, it is clear that the AO made the disallowance by observing that the assessee did not make any efforts to recover the bad debts hence the same is not allowable. From the vigilant reading of the impugned or .....

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hat these were genuine business debts appearing in the books of the company against incomes booked in earlier years and these were written off in the books from the year under consideration. The appellant has made reference of the judgment of Hon'ble Supreme Court in the case of TRS Ltd. vs. CIT (supra) as well as jurisdictional Hon'ble High Court of Delhi and Hon'ble ITAT Delhi in the case of CIT vs DCM Ltd (supra) and Triveni Engineering and Industries Ltd. vs. DCIT (supra) respect .....

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ebts made by the appellant was that the magnitude of such bad debts was very high and it was beyond the imagination of the AO that the appellant company would forego such a huge amount from its debtors. However, such an observation of the AO should have inspired and led the AO to establish the contrary. It is observed that the AO completely failed to discharge his onus in proving contrary to the claim of bad debts shown by the appellant. Although there was no such legal requirement under the exi .....

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