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| The Tax Publishers2020 TaxPub(DT) 1158 (Ahd-Trib) : (2020) 078 ITR (Trib) 0625 INCOME TAX ACT, 1961
Section 36(1)(vii)
Admittedly, party to whom assessee sold property became insolvent. Order of DRT was passed on 29-3-2016 whereas case of assessee pertained to assessment year 2014-15 and this fact was not in the knowledge of assessee at relevant point of time. As such it was not possible for assessee to foresee in future for recovery of amount by the order of Debt Recovery Tribunal. As such, assessee was entitled for bad debts claimed by him in the year under consideration.
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Business deduction under section 36(1)(vii) - Bad debts - Disallowance on the ground of debtor having agreed to pay in subsequent year before DRT -
Assessee engaged in real estate business sold its properties to certain party which become insolvent. Accordingly, wrote off amount due from it as not recoverable and claimed deduction under section 36(1)(vii). AO denied deduction on the ground that party concerned has agreed to make payment to assessee was as event from the order of Debt Recovery Tribunal (DRT) dated 29-3-2016. Held: Admittedly, party to whom assessee sold property became insolvent. Order of DRT was passed on 29-3-2016 whereas case of assessee pertained to assessment year 2014-15 and this fact was not in the knowledge of assessee at relevant point of time. As such it was not possible for assessee to foresee in future for recovery of amount by the order of Debt Recovery Tribunal. As such, assessee was entitled for bad debts claimed by him in the year under consideration.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-2015
IN THE ITAT, AHMEDABAD BENCH
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