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TMI Blog2019 (2) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the assessee to determine whether the debt is bad or not. We see that the Tribunal has looked at the financial figures as available in the previous year of the assessee-company as also the subsidiary company. The subsidiary company was in absolute financial stringency and there was no possibility of any recovery from that company. We do not see any question of law arising from the aforesaid issue, since the Tribunal had looked into the facts and found that the claim of bad debts cannot be said to be one which is made merely for absolving the tax liability. The financial figures on the subject year of the assessee-company and the subsidiary company commend such declaration of bad debts. We also do not agree with the AO's finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,58,927/- related to transactions with the subsidiary company on a principal to principal basis for supply of materials and the balance ₹ 17,37,048/- were stated to be amounts advanced by the assessee for job works entrusted to the subsidiary company. The Assessing Officer [for brevity AO ] found that there was no business expediency in declaring the debt to be bad debt. It is also found that the assessee had merely attempted financial support by writing off the bad debts, which cannot be permitted. It was also found that the assessee having continuous relationship with the subsidiary company; there cannot be any bad debt between themselves. 4. The denial of the claim under Section 37 with respect to ₹ 17,37,048/- was on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the subsidiary company to be executed for the assessee-Company. 7. We see that the Tribunal had considered the issue of the allowance under Section 36(1)(vii) especially with reference to the amendments made by Finance Act with effect from 01.04.1989. As the words existing prior to 01.04.1989, there as an obligation on the assessee to establish the bad debt claimed for the previous year, whereas by the amendment any bad debt or part thereof, which is written off as irrecoverable in the accounts of the assessee for the previous year is eligible for deduction. Hence, the legislature has cautiously left it to the prudence of the assessee to determine whether the debt is bad or not. Further, we see that the Tribunal has looked at the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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