9911796707
TMI Blog1988 (10) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... e of such business the assessee had a running account with Pent Ocean Shipping (P) Ltd., Bombay. Since the outstanding in this account was not cleared the assessee had to file a suit No. 534 of 1984 in the High Court at Bombay for the recovery of a sum of Rs. 6,53,359. On 11th Sept., 1984 a compromise decree was passed by the High Court stating that if the debtor pays a sum of Rs. 3,60,000 before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure of Rs. 20,186.15 and disallowed the balance of Rs. 2,93,358 on the ground that the decree had revived and the debt therefore could not be considered to have become bad. On appeal, the CIT (A) was of the opinion that the outstanding amount related to expenditure incurred for earlier years and could not be allowed as an expenditure relating to this year. He also noticed that the Advocate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned the circumstances which existed earlier and, therefore, there was an honest belief that the business loss could be limited to that amount. It was submitted that in the circumstances the deduction claimed should be allowed. On the other hand, it was contended on behalf of the Revenue that the deduction should not be regarded as a bad debt and since it was not clearly written off and the decree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these circumstances on an objective consideration the assessee concluded that it had become difficult or impossible of recovery. At the same time, the assessee had retained some ray of hope, however dim it may be, in respect of the sum of Rs. 3,60,000 promised to be paid in terms of the compromise decree. That was the reason why the assessee wrote off only the balance. Taking all the facts into co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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