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TMI Blog2012 (5) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... r years, the assessee had shown taxable income and if bad debts were written off in the said years, it would have resulted in lower taxation or nil taxation - Revenue has not been able to dispute and show that the provisions of Section 36(1)(vii) r.w.s 36(2)(i) are not satisfied in the present case – in favour of assessee. - ITA 500/2009 - - - Dated:- 9-4-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V.EASWAR, JJ. For Appellant: Mr. Sanjeev Sabharwal, sr. standing counsel. For Respondent: Mr. Ved Jain and Mr. Ashish Aggarwal, Advocates. O R D E R By order dated 8th November, 2010, this appeal under Section 260A of the Income Tax Act, 1961 (Act, for short) filed by the Revenue impugning order of the Income Tax Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2000-01 and thereafter bad debt of Rs.5,12,78,675/- was claimed in the assessment year in question. The Assessing Officer observed that the assessee had not furnished year wise analysis of the bad debts claimed or invoices year wise details. The documents furnished by the appellant were regarding the material supplied in the previous financial years, other than the financial year under consideration. He held that the assessee had also not furnished details of efforts made to recover the bad debt. The Assessing Officer concluded that the deduction towards bad debt cannot be allowed as it would give a distorted picture of business in the year in question. Accordingly, an amount of Rs.5,12,78,675/- was disallowed and added back to the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar in question. 7. The question, which arises for consideration, is whether bad debt should be allowed under Section 36(1)(vii) read with Section 36(2)(i) of the Act. The two provisions read as under:- 36(1) Other deductions.-(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- (vii) Subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year. 36(2) In making any deduction for a bad debt or part thereof the following provisions shall apply- (i) No such deduction shall be allowed unless such debt o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit and loss account of the assessee. The fact that these conditions are satisfied is not disputed by the Revenue. 10. The contention of the Revenue that writing off bad debts of Rs.5.12 crores in one assessment year would result in distortion of the profit and loss accounts of the year in question, is an attractive contention. But in the present case we are not inclined to examine the same. We may record here that the there have been several instances where Revenue has disallowed warranty claims on the ground that it was merely presumptive and unascertained liability and could be only allowed when the claim was actually made. However, in view of the decision of the courts, warranty claims are now allowed if made on scientific and on r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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