| The Tax Publishers2020 TaxPub(DT) 1557 (Bom-HC) : (2020) 426 ITR 0358 : (2021) 276 TAXMAN 0073 INCOME TAX ACT, 1961
Section 36(1)(vii)
It is a settled position in law that after 1-4-1989, it is not necessary for the assessee to establish or prove that the debt has in fact become irrecoverable but it would be sufficient if the bad debt is written off as irrecoverable in the accounts of the assessee.
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Business deduction under section 36(1)(vii) - Allowability of bad debts written off - Assessee whether required to prove that debt actually became irrecoverable -
Issue was as regards allowability of bad debts on account of inter corporate debt and advances under section 36(1)(vii) read with section 36(2) when assessee company was not a banking company or engaged in the business of money lending. Held: 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. It is a settled position in law that after 1-4-1989, it is not necessary for the assessee to establish or prove that the debt has in fact become irrecoverable but it would be sufficient if the bad debt is written off as irrecoverable in the accounts of the assessee. Further, it is not necessary, rather there is no requirement under the Act that the bad debt has to accrue out of income under the same head i.e 'income from business or profession' to be eligible for deduction. This is not a requirement of law. All that is required is that the debt in question must be written off by the assessee in its books of accounts as irrecoverable.
Followed:TRF Ltd. v. CIT (2010) 323 ITR 397 (SC) : 2010 TaxPub(DT) 1481 (SC); CIT v. Shri Shreyas S. Morakhia (2012) 342 ITR 285 (Bom) : 2012 TaxPub(DT) 0718 (Bom-HC); DIT v. M/s. Oman International Bank SAOG (2009) 313 ITR 128 (Bom) : 2009 TaxPub(DT) 1423 (Bom-HC); Mafatlal Finance Company Ltd. v. Asstt. CIT [ITA Nos. 7174 to 7176/MUM/2010, ITA No. 5531/MUM/2013, ITA No. 7177/Mum/2010, dt. 26-8-2016]
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE BOMBAY HIGH COURT
UJJAL BHUYAN & MILIND N. JADHAV, JJ.
Pr. CIT v. Hybrid Financial Services Ltd.
Income Tax Appeal No. 1265 of 2017 with Income Tax Appeal No. 1469 of 2017
11 February, 2020
Appellant by: Akhileshwar Sharma
Respondent by: Nitesh Joshi i/by R.V. Pillai
Ujjal Bhuyan, J.
1. This order will dispose of both Income Tax Appeal Nos. 1265 of 2017 and 1469 of 2017.
2. Heard learned counsel for the parties.
3. Assessee in both the appeals is the same. While Income Tax Appeal No. 1265 of 2017 relates to assessment year 2001-02, Income Tax Appeal No. 1469 of 2017 relates to assessment year 2003-04.
4. However, for the sake of convenience, we may refer to the facts in Income Tax Appeal No. 1265 of 2017.
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