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TMI Blog2015 (6) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of bad debts in respect of Reliance Industries Ltd. to the extent of Rs. 237554/- as the same was transferred to Sundry Credit/Debit balance written off accounts instead of the account "Bad Debts Written Off". 2. The CIT(Appeals) failed to appreciate that writing off irrecoverable in the account is satisfied as account of Reliance Industries Ltd. is Credited and Sundry Credit/Debit Balance is debited which goes to expense account. Thus the condition laid down in the case of TRF Ltd. is satisfied. 3. The CIT(Appeals) ought to have appreciated that the expression "Write-Off" as defined in dictionary for accounts of by Eric L.kohar as transfer the balance of an account previously regarded as an asset to an expense a/c or to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct") was framed vide order dated 03/11/2009, thereby the Assessing Officer (AO in short)made various disallowances; namely, on account of late payment of PF/ESI, on account of penalty expenditure, on account of penalty exp./late delivery and on account of disallowance out of bad debt. Against this, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions and perusing the records partly allowed the appeal. While partly allowing the appeal, the ld.CIT(A) deleted the disallowance made on account of late payment of PF/ESI, disallowance made on account of interest on payment of Excise, disallowance made on account of penalty/late delivery expenses and in respect of disallowance of bad debt, the ld.CIT(A) restricte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the A.R. of the appellant that the assessing officer has disallowed the bad debts on the ground that bad debt can be allowed on establishing by the assessee that the debt has become finally irrecoverable and bad. The A.R. further submitted that according to him merely written off bad debt is not only criteria. The A.O. has ignored the law now well settled in view of the decision in the case of T.R.F. Ltd. vs. CIT (230 CTR 14)(SC) to the effect that once the debts are written off bad in the books of accounts they are to be allowed as bad debts u/s.36(i) (vii) of the I.T.Act. The A.R. argued that it is not incumbent of the appellant to prove that the debts become bad. 6.2. I have carefully considered the facts of the case and legal posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as after this entry. In fact RIL entry was written off on 30.4.2006 and after this there are hundred of entries in that account during this year itself. The account is live in the succeeding years also. Same condition prevails with RCF Thal. The allowance of bad debts in respect of these parties is to be examined with this factual matrix. 6.2.3. As per the provisions of section 36(1)(vii) the conditions for allowance of bad debt are (1) It must be a proper debt or a part thereof. (2) It must be of a revenue nature. (3) It must be written off as irrecoverable in the accounts. All the above mentioned conditions are to be full filled consecutively to qualify for the deductions. The onus is on assessee to prove that all these conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. or RCF was never transferred to the sundry balance written off account. The assessee has only transferred one entry to the sundry balance written off a/c. Thus the "write off" condition is not fulfilled and the benefit of bad debts write off is not available to the assessee on these amount." 4.1. We do not find any infirmity in the order of the ld.CIT(A) as he has given a finding on fact that the condition has envisaged u/s.36(1)(vii) of the Act is not complied with by the assessee and the finding of the ld.CIT(A) on fact is not controverted by the assessee by placing any material contrary on record suggesting that the conditions for 'writing off' has been fulfilled. Therefore, in our considered view, the judgement of Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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