31 August 2009
1) CIT v. Kerala State Industrial Development Corporation Ltd. (2007) 289 ITR 238 (Ker): Held that,
Where the assessee could establish that there is no possibility of recovery of debts depending upon the financial position of the debtor company and write-off the same deduction u/s 36(1)(vii) shall not be denied. This position does not alter even where the debtor company is in the process of liquidation. In such cases, the AO cannot contend that the debtor company is in the process of liquidation and the assessee should have waited until the liquidation process complete to look for any possibility.
2) CIT v. T.Veerabhadra Rao, K. Koteswara Rao & Co. 155 ITR 152 (SC): Held that,
The successor of a business is entitled to claim deduction in respect of debt created by the predecessor.
3) CIT v. Hotel Ambassador (2002) 253 ITR 430 (Ker): Held that,
Bad debts claim is deductible only where it is written off in the books of account. A fresh claim of bad debt is not permissible in reassessment proceedings.
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