TMI Blog2005 (5) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee claimed bad debt of Rs. 1,49,433. on the advances made to M/s. La Medica (P) Ltd. of Delhi. Details of loan are given as under: -------------------------------------------------- Date of giving loan Amount Received back -------------------------------------------------- 16-4-1977 50,000 600 11-3-1977 1,00,000 600 7-2-1977 1,00,000 600 17-3-1977 1,00,000 600 1-4-1977 50,000 600 ----------------------------- 4,00,000 3,000 -------------------------------------------------- The respondent-assessee in reply to the query raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer. Feeling aggrieved, the respondent-assessee preferred further appeal before the Tribunal. The Tribunal, vide para 9 of its order dated September 14, 1993, accepted the claim of the respondent-assessee by observing as under: "We have considered the rival submissions and have gone through the evidence filed on record. Letter of the assessee and reply of M/s. La Medica (P) Ltd., established the fact that the assessee made earnest efforts to recover its amount from the company but the company was in a financial crisis. Therefore, it could not pay back the amount. Under these circumstances, the assessee has written off this amount. In the case of Jethabhai Hirji and Jethabhai Ramdas v. CIT [1979] 120 ITR 792 (Bom), the hon'ble Bombay Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent-assessee. We find that the Tribunal on the basis of evidence and material on record has recorded the finding of fact that the respondent-assessee who was aged about 88 years had made all efforts to recover/realise this amount of loan and having failed in his effort had written off the same as a bad debt. Thus, the Tribunal had come to the conclusion that the debt in question, which was given by way of loan to M/s. La Medica (P) Ltd., Delhi, in the year 1977 became irrecoverable in the assessment year in question and, therefore, the respondent-assessee had rightly written it off and claimed it as bad debt. Merely on account of the fact that no legal proceeding was initiated by the respondent-assessee, it would not make the bad debt a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting it off as a bad debt. When a creditor bona fide writes off the debt because there appears no chance of its recovery in the foreseeable future or where the recovery proceedings would be so cumbersome and expensive as to outweigh any advantage of instituting any recovery proceedings, the assessee discharges the onus and would be entitled to claim deduction of the bad debt under clause (vii) of section 36(1) of the Act. The principles laid down by the Bombay High Court, the Gujarat High Court and this court are squarely applicable to the facts of the present case. Thus, we do not find any legal infirmity in the view taken by the Tribunal. We, accordingly, answer the question referred to us in the affirmative, i.e., in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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