Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
07 November 2014Friends/Seniors
Is entering into a litigation or filing a suit with the debtor mandatory to claim bad debt from the total income under section 36(1)(vii) and book profit for MAT purposes.
Regards,
Mihir
(Wealth Manager)
(5293 Points)
Replied 07 November 2014
It is not mandatory to file a suit against a debtor to show bad debts. Only the proof that the company has followed due procedure to recover the money from the debtors as any prudent company would do.
Gagan Deep Singh
(CHARTERED ACCOUNTANT)
(1190 Points)
Replied 22 November 2014
You may claim bad debts even by book adjustment also if it is supported by documents like sale invoice that u have earlier shown it as your income.
Anmol Juneja
(Student)
(104 Points)
Replied 22 November 2014
Agreed with Gagan & Mihir. S.C. also took the same stance in case of TRF Ltd. v/s CIT [2010]:-
"After 1-4-1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee."
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