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2015 (3) TMI 399 - ITAT BANGALOREDeduction on account of bad debts written off u/s. 36(1)(vii) denied - Held that:- Considering the accounting principles described it cannot be the legislative intent of section 36(1)(vii) to mandate that the debit to the profit and loss account be in the same previous year in which the claim is made there under. While a debit to the profit and loss account is certainly a prerequisite for a write off, such a debit alone does not constitute a write off until the asset being written off is obliterated by a credit to its account. Where this credit has occurred in a subsequent year, the asset can be said to have been written off only in such subsequent year. There has been a write off by squaring off the debtors account only in the previous year relevant to A.Y. 2009-10. This should be sufficient for the Revenue to allow the claim of assessee us/. 36(1)(vii) of the Act. For the reasons given above, we direct the AO to allow claim of the assessee for deduction for the amount of bad debts - Decided in favour of assessee. Disallowance of payments to non-residents - deduction claimed by the assessee under the head ‘agency commission’ u/s. 40(a)(i) - Held that:- On applicability of Expln-2 to Sec.195(1) of the Act which was introduced by the finance Act, 2012 w.e.f. 1.4.1962, we are of the view that the said explanation is applicable only when there is accrual of income in India. When the conclusion reached is that there is no accrual of income in India, we fail to see how Expln.2 to Sec.195(1) of the Act are attracted. Thus there was no obligation on the part of the Assessee to deduct tax at source while making payment to the non-resident. Consequently, no disallowance of commission expenses paid to non-resident could be made invoking the provisions of sec.40(a)(i) of the Act. We hold accordingly and direct the AO to delete the disallowance so made. - Decided in favour of assessee.
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