S. 36(1)(vii) : Bad debt-Pendency of dispute-Lease rental- Depreciation-Once a business decision has taken to write off a debt as a bad debt in books of account should sufficient to allow the claim as bad debt. [S. 36(2)]
The assessee is a non Banking Finance Company engaged in the business of inter alia of lease finance. The lessee defaulted in payment of instalments. The Assessee approached the High court seeking winding up of Orson Electronics Ltd and appointment of Official liquidator too safe guard the interest of the creditor. The assessee wrote off the amount due as bad debt in the books of account. The Assessing Officer disallowed the claim of the assessee on the ground that pendency of dispute. The Order of assessing Officer is affirmed by the Tribunal. On appeal allowing the claim the Court held that once a once a business decision has taken to write off a debt as a bad debt in books of account should sufficient to allow the claim as bad debt . (AY. 1991-92). (ITA No. 70 of 2004 dt.18-7-2022)
L.K.P. Merchant Financing Ltd. v. Dy. CIT (Bom.)(HC) www.itatonline.org
[Coram : Hon’ble Shri Jutice Dhiraj Singh Thakur and Hon’ble Shri Jutice Abhay Ahuja]