9911796707
TMI Blog1992 (1) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 25,67,488 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in accepting the assessee's claim that once the amount of the debt is debited to the profit and loss account, it is immaterial which account, has been credited and that mere passing of the entry into the debt side of the profit and loss account tantamounts to writing off of the bad debts ? 2. The facts found by the Tribunal are as under : The assessee is Union Carbide India Ltd. and the assessment year involved is 1979-80. The assessee-company debited a sum of ₹ 25,67,438 in its profit and loss account as debts and credited the provisions for doubtful debts, to that extent. The assessee claimed the debts as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal has recorded the arguments made on behalf of the assessee as under: At the time of hearing of the appeal, Sarvashri V.K. Kalra and K.S. Ramchandran drew my attention to the fact that the primary and most important requirement for the allowance of bad and or irrecoverable debts is that the same has become bad and/or irrecoverable in the relevant accounting year, in which respect the onus is on the assessee to establish the claim. It has been vehemently urged before me at the time of hearing of the appeal that this onus of the appellant has been fully discharged before the Income-tax Officer during the course of assessment proceedings in regard to justifying claim for deduction of the debts in question which have become bad and/or ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds 'write off is concerned and that it is not necessary for the purpose of claim of deduction pertaining to bad debts, to post corresponding entries in ledger accounts of the concerned parties and to close their accounts, on reference to section 36(2)(i)( b) of the Income-tax Act, 1961 based on which the Income-tax Officer has made the instant addition. In this regard, reference has been invited to the Gujarat High Court judgment in the case of Vithaldas H. Dhanjibhai Bardanwala v. CIT [1981] 130 ITR 95, wherein, it has been claimed on behalf of to appellant-company, that the facts, which are exactly similar to the point presently under appeal, have been decided in favour of the assessee and against the revenue. The Tribunal follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss account and credit entries in the bad debts reserve account' are sufficient to constitute the writing off of bad debts in the accounts of the assessee. No book on accounting practice has been cited before this Court to show that what the assessee has done will not be sufficient to constitute the writing off bad debt. 5. Dr. Pal in his reply has contended that the requirement of writing off of a bad debt as irrecoverable in the accounts of the assessee is to reflect the fact that assessee had written off, as irrecoverable, the debt in his books of account for the relevant previous year. By such debiting to the profit and loss account the amount of bad debt, the assessee has indicated a clear intention of treating the bad debt as ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has clearly demonstrated its intention not to treat the said bad debt as an asset and provided for the said amount by crediting the amount with the account 'provision for doubtful debt' and debiting the profit and loss account under the heading 'Provision for doubtful debts'. 7. In my judgment, the assessee is not entitled to get the relief provided by section 36 unless it strictly complies with the terms and conditions thereof. A number of deductions are allowed under section 36. In order to avail of the deductions, certain conditions will have to be fulfilled. One of the deductions available to the assessee under section 36 is on account of bad and irrecoverable debts. But in order to claim these deductions it wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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