CA Mayur Sojrani (CA) (318 Points)
22 December 2010My assessee which is a company had made some advance for business purpose which had became as bad debt & has written off by them in their books of account.
Now the ACIT has not allowed that loss on some grounds....!
Are their any judgements which are similar to this case so as to claim such losses.
Plz comment & provide the link of the Income Tax judgement if any one know ..!
Thanking in advance...
CA.Lakshmi Ramanathan
(INDUSTRY)
(69 Points)
Replied 22 December 2010
This is from BCAS referencer.....pl refer it for further details
If the assessee debits the P&L A/c and creates a provision for bad debts and also reduces the corresponding amount from the debtors account in the Balance Sheet, the provisions fo s. 36(1)(vii) are duly complied with - (Vijaya Bank v. CIT – CA No. 3286/87 of 2010 dated 15.04.2010 – www.itatonline.org)
There is no requirement to prove that the debt has become bad. Mere writing off of te debt is sufficient for claiming the deduction – (TRF Ltd. v. CIT CA No. 5293 of 2003 dated 09.02.2010 – www.itatonline.org)
prashant goyal
(CA-Final)
(100 Points)
Replied 26 December 2010
hey mayur
bad debt u/s 36 could be claimed only if amount has been previously considered in computing income under the head business or profession so in your case it is not possible to claim bad debt u/s 36 but in case if advance were made for revenue expenditure then assessee could claim loss u.s 28 as trading losses.. otherwise not possible
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