Allowances in assessing business income-Bad and doubtful debts -Bad debts of banks. - Income Tax - 27(19)-IT/49

Circular Number: 27(19)-IT/49 Dated 02/09/1969 Subject:- Allowances in assessing business income-Bad and doubtful debts -Bad debts of banks. With reference to the correspondence ending with your letter No. 2880 dated the 18th August, 1949, I am directed to state that the questions whether a debt is a bad debt and when it became bad, are mainly questions of fact to be determined in case of dispute not by the assessee or by the exercise of any option on his part of declaring it bad but by the I.T.O. (subject to appeal) upon a consideration of all relevant circumstances. When all the facts on which a public bank reached the decision that a particular debt (or a part of it) has become irrecoverable are placed before the I.T.O., the I.T.O. might take a reasonable view of the evidence before reaching his finding. As far as the Board are aware, serious disputes between a public bank and the I.T.Os. have not so far arisen in the matter of bad debts and they trust that the position will be maintained in future. As regards the question of accepting audit certificate the whole matter has been gone into by the Income-tax Investigation Commission and attention is invited to paragraph 206 of their Report.