Catherine (Student) (105 Points)
21 November 2014My question is if the following bad debts are deemed irrecoverable by a firm selling Iron products, will they be allowed under 36(1)(vii)?
1. Debtors who took goods on credit and did not pay the firm.(Bad debt in normal course of sales)
2. Advances given to suppliers for which no goods were received(Advances to suppliers gone bad)
3. Advances given to employees who left the firm and did not settle their dues.
Please state your reasons too.
Dipjyoti Majumdar
(CA in service & CS. dipmaj@ rediffmail.com )
(3468 Points)
Replied 21 November 2014
Yes these will be allowed as a deduction from business income. But you need to prove to assessing officer about the genuiness of your claim. Keep some evidences ready that you wanted to realise the money but could not be recovered. Sometimes, a legal notice may be kept on record.
Thanks,
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