| COURT: | Bombay High Court |
| CORAM: | Milind D. Jadhav J, Ujjal Bhuyan J |
| SECTION(S): | 36(1)(viii), 36(2) |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Bad Debt |
| COUNSEL: | Akhileshwar Sharma, Nitesh Joshi |
| DATE: | February 11, 2020 (Date of pronouncement) |
| DATE: | June 23, 2020 (Date of publication) |
| AY: | 2001-02, 2003-04 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 36(1)(vii)/ 36(2): Write-off of inter corporate deposits and advances given for purchase of vehicles or plant and machinery is allowable as a bad debt. There is no requirement under the Act that the bad debt has to accrue out of income under the same head i.e 'income from business or profession' to be eligible for deduction. All that is required is that the debt in question must be written off by the assessee in its books of accounts as irrecoverable | |
It is a settled position in law that after 1.4.1989, it is not necessary for the assessee to establish or prove that the debt has in fact become irrecoverable but it would be sufficient if the bad debt is written off as irrecoverable in the accounts of the assessee. This is because, as held by this Court, decision to treat a debt as a bad debt is a commercial or business decision of the assessee. Recording of a debt as a bad debt in his books of accounts by the assessee prima facie establishes that it is a bad debt. If the Assessing Officer disputes that the onus would be on him to prove otherwise
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