Deduction u/s 36(1)(vii).

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..... r by the State Textile Corporations set up in the various States. The Board had occasion to examine the question of allowance of bad debts in the hands of assessees who had sold stocks, raw materials, milling stores to such sick mills. Section 36(1)(vii) of the Income-tax Act; 1961 authorises deduction of any debt which is established to have become a bad debt in the previous year. When the manage .....

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..... ndertaking was declared a relief undertaking and any remedy for the enforcement thereof shall be suspended and all proceedings relating thereto pending before any court or tribunal shall be stayed. 2. There are similar provisions relating to undertakings taken over by the State Textile Corporation. It cannot be stated that any debts owed by such sick mills become bad when they are taken over by .....

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..... (xi) of the I.T. Act, 1922 it is considered that the provision in Section 36(1)(vii) also covers doubtful debts. 3. Hence where a claim under Section 36(1)(vii) is made by the suppliers of stores etc. to sick mills that have been taken over by Government or a public sector undertaking the Income-tax Officer should examine the claim sympathetically and try to arrive at a decision after taking int .....

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