INCOME TAX ACT, 1961

Business Deduction under section 36(1)(vii) - Bad debts -Not written off in books of accounts

Held: Assessee did not write off the debt in question as irrecoverable in his accounts for the previous year. Hence as per section 36(1)(vii), the debt cannot be allowed as a 'bad debt'. It may be that the assessee committed an inadvertent mistake, but we cannot go by notions of equity in tax matters. Therefore, deduction under section 36(1)(vii) could not be allowed to assessee.

Income-tax Act, 1961, Section 36(1)(vii)

A.Y. :1997-98
Decision: In favour of revenue.

Case Law Analysis:CIT v. Asea Ltd. [2002] 258 ITR 407 / 124 Taxman 598 (Bom.) [Para 18], Partington v. Attorney General [1869] LR 4 HL 100 [Para 20], CIT v. Shahzada Nand & Sons [1966] 60 ITR 392 (SC) [Para21], IRC v. Hinchy [1960] AC 748 (HL) [Para 21], CIT v. V. Mr. P. Firm [1965] 56 ITR 67 (SC) [Para 22], CIT v. Madho Pd. Jatia [1976] 105 ITR 179 (SC) [Para 22],

CIT v. Micromax Systems (P) Ltd.