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TMI Blog2013 (7) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 211 - SUPREME COURT) wherein held that w.e.f. 01.04.1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact has become irrecoverable. It is enough of the bad debt is written off as irrecoverable in the accounts of the assessee. In favour of assessee. - ITA No. 5696/Mum/2012 - - - Dated:- 30-4-2013 - Shri Rajendra Singh And Shri Vivek Varma,JJ. For the Petitioner : Shri Shekhar Gajbhiye For the Respondent : Shri Dharmesh Shah D Shri K. S. Choksi ORDER Per Rajendra Singh, A. M. This appeal by the assessee is directed against the order dated 4-7-2012 of CIT(A) for the assessment year 2009-10. The disputes raised by the assessee in this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. The assessee disputed the decision of Assessing Officer and submitted before CIT (A) that the assessee had dealt with the said party for years together and since the party had gone through the bad times, the amount was written off. The assessee also renewed transactions with the said party and sales made during the year were Rs. 22,17,269/-. It was also submitted that in view of the amended provisions w.e.f 4.4.1989, the assessee was not required to prove that the debt had actually become bad and only write off of the bad debt in the books of accounts was sufficient for liability of claim. 4. CIT (A), however, did not accept the contentions raised. It was observed by him that the assessee had made the claim of bad debt in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 ITR 80) in which the high court observed that though it was not necessary for the assessee to establish that the debt had become bad there should be some semblance of genuineness of the entry. It should not be totally fake entre. The High Court also observed that said entries could always be examined by the AO before allowing the deduction. CIT (A) therefore held that the Assessing Officer was empowered to examine whether the claim of write off was bonafide commercial decision and not whimsical and fanciful. CIT (A) held that though burden was not on the assessee to establish that the debt had become bad the assessee was required to show that it was a business or commercial decision and not whimsical and fanciful, which had not been done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the decision to write off business was a bonafide commercial decision and not whimsical and fanciful. The authorities have also observed that the assessee was still having transactions with the said party in the current assessment year and therefore, the decision to write off was not bonafide. The case of the assessee is that it had been making sales to the said party for several years and since the party had gone through bad times the outstanding amount relating to financial year 2003-04 was written off in assessment year 2009-10 and the assessee also renewed business with the said party during that year. The assessee had started business with the party during financial years 2006-07 and 2007-08. It is thus obvious, that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken into account in computation of income in earlier year as provided in section 36(2). There is no dispute about the fulfillment of such condition. Therefore, all conditions relating to allowability of claim of bad debt being fulfilled, the claim cannot be disallowed on the ground that the write off is not bonafide. The authorities below have relied on the judgment of Hon'ble High Court of Bombay in case of Oman International Bank Saog (Supra) but the said judgment was prior to the judgment of Hon'ble Supreme Court in case of TRF Ltd. (Supra) which has finally settled the issue as mentioned earlier. Moreover, it is a settled legal position that business expediency or bonafides of a business decision is required to be examined from the poi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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