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TMI Blog2013 (8) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... see based on the relevant material in the possession of the assessee. Once the assessee records the debt as a bad debt in his books of account that would prima facie establish that it was a bad debt unless the Assessing Officer for good reasons holds otherwise - Following decision of Director of Income Tax (International Taxation) vs. Oman International Bank [2009 (2) TMI 54 - BOMBAY HIGH COURT], CIT vs. Sri Ram Gupta [2005 (5) TMI 64 - ALLAHABAD High Court] and TRF Ltd. vs. CIT [2010 (2) TMI 211 - SUPREME COURT] - Decided against Revenue. - Income Tax Appeal No. - 23 of 2011 - - - Dated:- 31-7-2013 - Hon'ble Sibghat Ullah Khan And Hon'ble Dr. Satish Chandra,JJ. For the Appellant : D. D. Chopra, Ghanshyam Chaudhary For the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department has knocked the door of this Court by filing the present appeal. With this background, Sri D. D. Chopra, learned counsel for the department submits that to allow the Bad Debt in the instant case, it is required to be proved that depositing the money with the banking company is a part of money lending business and comes within the circumvent of provisions of section 36. In the instant case, it is certainly not found as part of money lending business and even for discussion sake if it is treated as part of money lending business then also the issue has been settled by Hon'ble Supreme Court in the case of Amarchand Sobhachand v. CIT (1965) 56 ITR 594 (Mad) affirmed (1971) 82 ITR 591 (SC) that a general balance due in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read out provisions of Section 36 (1) (vii) of the Income Tax Act, which on reproduction read as : Section 36 (1) (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. Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to pay any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause." Lastly, he prays to uphold the impugned order. After hearing both the parties and on perusal of record, it appears that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blish that the debt had become bad. It was to overcome this that the amendment was made resulting in a bad debt now being straightway allowed in the year of write off. This amendment was a conscious decision taken to eliminate litigation with regard to establishing what is a bad debt. By virtue of section 41 (4), where a deduction has been allowed in respect of a bad debt, which is irrecoverable and the amount or a part thereof is subsequently recovered, then that amount shall be deemed to be profits and gains of business or profession of that relevant previous year. Further, to treat the debt as a bad debt had to be a commercial or business decision of the assessee based on the relevant material in the possession of the assessee. Once th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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