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TMI Blog2013 (9) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Appellate Tribunal, Delhi Bench: 'A' New Delhi in Income Tax Appeal No. 2017/Del/10, relating to the Assessment Year 2006-07. 4. The department-appellant has raised the following substantial question of law, for consideration:- "Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting the disallowance of Rs.11,52,901/- made by the A.O. On account of "Bad Debts Written off" ignoring the CBDT Circular No. 551 dated 23-01-1990, the amended provisions of Section 36(1)(vii) regarding allowability of bad debts despite the fact that the assessee has failed to substantiate that the debt has become bad as some of the parties were Govt., Semi Govt. undertakings, Banks, Hospitals etc. to whom debt wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed. 7. In appeal, the CIT (A) recorded its findings as follows:- "I have considered the facts of the issue, the findings of the AO, submissions of the AR and the prevalent provisions of section 36(1)(vii) as are amended w.e.f. 1.4.1989 and am of the considered view that under the present provisions the appellant is not required to establish that a debt has become bad and the writing off of the said debt as bad in the books of account of the assessee is substantial compliance of the provisions. The AO has not made a finding that the said debts were not written off as bad in the books of account and therefore I hold that the claim of bad debts of Rs.9,93,751/- is allowable. Further, I also find substance in the submissions of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l course of business which could not be recovered. The assessee claimed that writing of these amounts is allowable u/s 37 of the Act. The AO was of the opinion that assessee failed to prove that these debts have actually become bad. Therefore its claim cannot be allowed. 4. On appeal Ld. CTI(A) has deleted the disallowance by putting reliance upon the decision of Hon'ble Delhi High Court in the case of CIT Vs. Autometers Ltd. 292 ITR 345. According to the Ld. CIT(A) there is a significant difference between the provisions of section 36(i)(vii) as it stood prior to 1.4.1989, and the provision as stands till date. Prior to 1.4.89, it was necessary for the assessee to establish that the debt had become bad whereas after 1.4.89 for the debt to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 36 (1) (vii) of the Act, there is no requirement to establish that debts has become irrecoverable in the accounts of the assessee for the previous year. Sub section (vii) of Section 36 (1) of the Act provides for allowing deductions subject to 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. There is no requirement under sub section (2) of Section 36 of the Act that assessee should produce evidence before the AO that he has made sufficient effort to recover the amount. The assessee has turnover of more than Rs.19 crores, and had filed return of income, declaring income of Rs. 1,64,80,293/-. The amount of Rs. 11,52,901/-, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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