DISALLOWANCE OF BAD DEBT

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 August 2010 IN SCRUITNEE, THE AO IS DISALLOWED THE BAD DEBT AND THE REASON FOR THAT, THERE IS NO SPECIFIC INFORMATION FROM THE CLIENT.
IS IT BE DISALLOWED ?
PLEASE REPLY WITH CASE LAW?

CA Sanat Pyne

CA Sanat Pyne (Expert)
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01 August 2010 Assessee is entitled to claim deduction if the debt had been written off as irrecoverable in the books of account and there is no obligation on the assessee to establish that debt had became bad. CIT v Rajendra Y. Shah S.L.P.(C) NO 8364 of 2009. Dt 2-4-2009. (2009) 313 ITR ( st ) 3. Editorial - Judgment of Mumbai Tribunal Shri Rahendra Y. Shah v ACIT ITA no 1437/Mum/1999 Bench B dt. 21-9-2006. (Asst year 1992-93) Judgment of Bombay High Court ITA NO 1000 OF 2007 dt. 10th July 2008. DCIT v Oman International Bank (2009) 313 ITR 128 (Bom), CIT v Star Chemicals (Bombay) P. Ltd (2009) 313 ITR 126 (Bom).
Matter is referred to special bench in case of share broker to decide the following questions of law. Shri Shreyas S. Morakhia ITA No. 3374/M/04. Asst. Year 1998-99 fixed for hearing on 1/9/2009. "Whether on the facts and circumstances of the case and in law, the assessee, who is a share broker, is entitled to deduction by way of bad debts under section 36(1)(vii) read with section 36(2) of the income Tax Act.,1961 in respect of the amount which could not be recovered from its clients in respect of transactions effected by him on behalf of his client apart from the commission earned by him?"