The Tax Publishers2022 TaxPub(DT) 5832 (Ahd-Trib)

INCOME TAX ACT 1961

Section 36(1)(vii)

Where amounts that were appearing as sundry debtors in the books of account of assessee showed that the corresponding bills were duly accounted by assessee in its books of account and the income was duly recognized and CIT(A) in his impugned order had clearly stated that these debts having been written off in the books of account of assessee-company in the year under consideration and having already been credited as income in the preceding year(s), the same were allowable as expenditure under section 36(1)(vii). Thus, action of AO in disallowing the claim of assessee for deduction on account of bad debts written off was unjustified.

Business deduction under 36(1)(vii) - Bad debts - Written off in books of account -

Assessee company claimed in the profit and loss account filed along with its return of income, a sum debited on account of sundry debtors written off. It was noted by AO that actual bills raised by assessee-company were not entertained as well as certified by the debtor companies. Thus, AO disallowed the claim of assessee for deduction on account of bad debts written off. Assessee submitted that bills were duly raised by it on the concerned debtors and when the amounts of the said bills became irrecoverable for the reasons clearly stated before AO, the same were written off as bad debts in the books of account and deduction was claimed. CIT(A) restricted the addition made by the AO on account of sundry debtors written off . Aggrieved by order of CIT(A), Revenue preferred present appeal. Held: As rightly submitted by assessee in this regard, the claim of having raised the bills on the concerned creditors was duly made by assessee while explaining the reasons before the AO for non-acceptance of the said bills by the concerned debtors. Merit was found in the contention of assessee that the fact that these amounts were appearing as sundry debtors in the books of account of assessee showed that the corresponding bills were duly accounted for by assessee in its books of account and the income was duly recognized. Further, CIT(A) in his impugned order had clearly stated that these debts having been written off in the books of account of assessee-company in the year under consideration and having already been credited as income in the preceding year(s), the same were allowable as expenditure under section 36(1)(vii) . Thus, there was no justifiable reason to interfere with the impugned order of the CIT(A) giving relief to assessee on this issue and upholding the same, ground of Revenue's appeal was dismissed.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :


INCOME TAX ACT 1961

Section 37(1)

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com