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| The Tax Publishers2020 TaxPub(DT) 1902 (Mum-Trib) INCOME TAX ACT, 1961
Section 36(2)(i) Section 36(1)(vii)
When assessee holding a conviction that entire amount receivable from NSEL could not be recovered, thus wrote off' 25% of the entire receivable in its books of accounts, there was no justification on part of AO to have declined said claim of deduction so raised by assessee on the mere ground that assessee failed to establish that the debt in fact, had become irrecoverable.
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Business deduction under section 36(1)(vii) - Bad debts - Amount from NSEL not recovered -
Assessee-company engaged in financing, trading and sub-broking of shares and securities claimed deduction of bad debts under section 36(1)(vii) by writing off 25% of outstanding dues o NSEL towards assessee. AO noticed that matter was under investigation by Economic Offenses Wing (EOW) and recovery process was being monitored by a committee appointed by High Court and accordingly, AO took the view that claim of 'bad debts' raised by assessee due to non-delivery of stock was premature and hence could not be allowed.Held: As per post-amended section 36(1)(vii), it is not necessary for assessee to establish that the debt in fact, had become irrecoverable. It is enough if 'bad debt' is written off as irrecoverable in accounts of assessee. Accordingly when assessee holding a conviction that entire amount receivable from NSEL could not be recovered, thus wrote off' 25% of the entire receivable in its books of accounts, there was no justification on part of AO to have declined said claim of deduction so raised by assessee.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE ITAT, MUMBAI BENCH
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