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2023 (5) TMI 702 - ITAT AHMEDABADDisallowance of bad debts written off - appellant had not written off the same in its books of accounts - assessee has not put any effort into the recovery of such bad debts - CIT(A) concluded that the assessee has not written off bad debts to the tune of Rs. 69,33,446.00 in the books of accounts and therefore, he disallowed the same - HELD THAT:- We are not in agreement with the finding of the CIT(A) on the reasoning that the assessee has not written of the bad debts amounting to ₹ Rs. 69,33,446.00 against the provision for the bad debts which has already suffered the tax. Any adjustment made by the assessee on account of the bad debts against the provisions created in the earlier year amounts to actual writing off the bad Debts in the books of accounts. Thus, the assessee cannot be denied the benefit for the bad debts merely on the reasoning that such bad debts were not claimed in the profit and loss account but adjusted against the provision of bad debts. Appeal of the assessee is allowed. Admittedly, the provision was created by the assessee in the earlier year out of the profit and loss account. Thus, any adjustment against such provision for bad and doubtful debts amounts to actual writing off the bad debts. Thus, we set aside the finding of the CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
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