Disallowance of loans and advances written off as bad debts

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 May 2013 This is the case of a listed public limited company. The company decided to write off an advance of Rs. 700,000/- grouped under (Loans and advances) given during the year and the same was approved through a board resolution. The corresponding debit was given to Bad debts written off a/c. Now, the question arises as to whether this is an allowable expenditure under sec36 of the IT act as the advance given was not in the nature of trade advance.

Guest

Guest (Expert)

24 May 2013 If the loan granted was not in the nature of trade advance, moreover if the company is not a financial institution.

In that case, the company can not claim such written off expenditure as allowable expenditure under the income tax act.

No section will allow such admissibility.