The assessee had claimed a deduction of bad debt under section 36(1)(vii) of the Act. The ITO disallowed the claim of bad debts on the ground that the assessee\u00a0 was unable to establish that the facts that the debt had become irrecoverable.<\/p>\n
\u00a0<\/p>\n
Whether the assessee has to establish that the debt has become irrecoverable to claim deduction under section 36(1)(vii) of the Act or a mere\u00a0 write\u00a0 off\u00a0 of such debt in the books of Account is sufficient?<\/p>\n
\u00a0<\/p>\n
Prior to 1-4-1989, deduction under section 36(1)(vii) of the Act was allowed in respect of amount of any debt, or part thereof, which was established to have become irrecoverable in the previous year. However, subsequent to the amendment\u00a0 to the Act w.e.f. 1-4-1989 deduction was available in respect of amount of any bad debt or part thereof which was written off as irrecoverable in the accounts of the assessee for the previous year. Thus, the condition for availability of deduction\u00a0\u00a0\u00a0\u00a0\u00a0 of bad debts was changed from establishing the debt to be irrecoverable to mere write off of such bad debts in the books of account.<\/p>\n
\u00a0<\/p>\n
Subsequent to 1-4-1989 it is not necessary for\u00a0 the\u00a0 assessee to\u00a0 establish that the debts have become irrecoverable. It is sufficient ifthey are written off as irrecoverable in the accounts of the assessee. (AY. 1990-91 1993-94, 1994-95)\u00a0 (CA Nos. 5292 to 5294 of 2003dt. 9-2-2010)<\/p>\n
Editorial <\/em><\/strong>: This judgement is followed in by the various High Courts some of which are as under:<\/p>\n \u00a0<\/em><\/strong><\/p>\n \u00a0<\/em><\/strong><\/p>\n CIT v. Krone Communication Ltd. (2011) 333 ITR 497 (Karn)(HC) CIT v. Samara India Pvt. Ltd. (2013) 356 ITR 12 (Delhi) (HC)\u00a0<\/em><\/strong><\/p>\n \u201cStrength does not come from physical capacity, it comes from indomitable will.\u201d<\/em><\/p>\n – Mahatma Gandhi<\/p>\n","protected":false},"excerpt":{"rendered":" S.36(1)(vii): Bad debt \u2013 Mere write off is sufficient for claiming deduction of bad debt\u2013 Held, Yes Subsequent to 01\/04.1989, no requirement to establish that the debt has become irrecoverable. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-13312","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3sI","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13312","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=13312"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13312\/revisions"}],"predecessor-version":[{"id":13313,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13312\/revisions\/13313"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=13312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=13312"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=13312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}CIT v. Sharda Worldwide Exports Pvt. Ltd (2015) 61 taxmann.com 100 (Bom.) (HC)<\/h4>\n