Assessee given advance to a Company for Supply of Plant & Machinery, Company gone into liquidation, the advance is not recovered then the amount is write off from books, as per income tax act this amount is allowed as bad debts or not???
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Bad debts is a allowable as a deduction
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Only those items which is any time during any prevoius year was part of Income under Income Tax Act, can be allowed as Bad Debts i.e. debtors for sale for goods & service but not for Loans & Advances except Financial institutions
YES as entry for bad debts is booked its allowed as deduction.
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