bad debt recovered

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 June 2011 wheather baddebt recovered is taxable in business income in the year of receipt?
if business has discontinued and then baddebt recovered after some year, what should be the adjustment?

CA Harish Suwalka

CA Harish Suwalka (Expert)
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23 June 2011 bad debts recovered will be taxable as follows
:- if the bad debts were Deducted from Profit when occurred
than the amount recovered will be taxable under "business & profession head", the fact that business has been discontinued will not have any impact

:- if the amount of bad debts was not allowed to be deducted from profits when the bad debts occurred than no treatment will be required and the recovered amount will not be taxable, also the dis-continuity of business will not have any impact in this case