9911796707
TMI Blog2012 (9) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... to 1st April, 1989. 3. The assessee is a State Public Sector Undertaking. It claimed deduction for bad debt under Section 36(1)(vii) of the Income Tax Act, 1961 [for short, 'the Act'], which required two conditions to be satisfied at the relevant time, namely, that (a) bad debt must be established to have become bad in that year; and (b) bad debt should have been written off in the books of account of that year. 4. The question before us is, whether the claim of the assessee satisfies both the afore-stated conditions. 5. The assessee is a State Industrial Development Corporation Limited, Trivandrum. It had advanced loans/credit facilities to M/s. Vanchinad Leathers Limited, a joint sector Company promoted by the appellant for processing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing deduction for bad debt under Section 36(1)(vii) read with Section 36(2)(i)(b). Firstly, the appellant is a State Public Sector Undertaking; and secondly, the appellant was the promoter of M/s. Vanchinad Leathers Limited. This aspect has not been considered by the Tribunal. The assessee was in the business of promoting industrial development in the State of Kerala. In the course of the business of the assessee, it had promoted M/s. Vanchinad Leathers Limited. As a promoter, it was in a position to find out whether M/s. Vanchinad Leathers Limited was in a position to carry on business in future. Thirdly, M/s. Vanchinad Leathers Limited was a Joint Sector Company. It was a typical Public/Private partnership. None of these aspects have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or, the assessee was still entitled to deduction under Section 36(1)(vii). (See CIT v. Jwala Prasad Tiwari [1953] 24 ITR 537 (Bom) and Vithaldas H. Danjibhai Bardanwala [1981] 130 ITR 95 (Guj)). Such state of law prevailed up to and including Assessment Year 1988-1989. However, by insertion (w.e.f. 1-4-1989) of a new Explanation to Section 36(1)(vii), it has been clarified that any bad debt written off as irrecoverable in the account of the assessee will not include any provision for bad and doubtful debt made in the accounts of the assessee. The said amendment indicates that before 1-4- 1989, even a provision could be treated as a write-off. However, after 1-4-1989, a distinct dichotomy is brought in by way of the said Explanation to Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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