9911796707
TMI Blog2024 (12) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) TMI 211 - SUPREME COURT ] We are of the considered view that the assessee is eligible for deduction for bad debts written off, upon satisfying the conditions provided u/s 36(1)(vii) r.w.s. 36(2) of the Act. CIT(A) without appreciating the relevant facts, simply sustained the additions made by the AO. Thus, we set aside the order of the CIT(A) and direct the AO to delete the additions made towards bad debts written off. Appeal filed by the assessee is allowed. - Shri Manjunatha G., Accountant Member And Shri K. Narasimha Chary, Judicial Member For the Assessee : Shri GVN Hari, AR For the Revenue : Shri Srinath Sadanala, DR ORDER PER. MANJUNATHA G., A.M: This appeal filed by the assessee is directed against the order dated 25/07/2024 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this regard, the assessee was asked to submit the details of the parties from whom the assessee could not recover its debts, along with detailed addresses and PAN of the parties. In response, the assessee filed details of bad debts written off in its books of accounts along with ledger account copies of respective debtors. The Assessing Officer on perusal of the details submitted by the assessee observed that the assessee could not prove the bad debts written off in its books of accounts are, in fact bad debts and irrecoverable with relevant evidences. In order to claim deduction towards bad debts written off, three conditions should be satisfied and as per the said provisions, there must be a debt before claiming an amount as a bad debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the assessee. In this regard, the assessee relied on the decision of Hon'ble Supreme Court in the case of TRF Ltd. Vs. CIT 323 ITR 397(SC). 4. The Ld.CIT(A) after considering the relevant submissions of the assessee and also taking note of reasons given by the Assessing Officer to make additions towards write off of bad debts, observed that the appellant is not able to prove the claim of bad debts with relevant evidences and also how the deduction claimed towards write off of bad debts is really a bad debt in the impugned assessment year. The Ld.CIT(A) further observed that in order to claim deduction u/s 36(i)(vii) r.w.s.36(2) of the Act, there must be a debt in the books of accounts of the assessee and the same must have been wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Khyati Realtors Pvt. Ltd.(supra) submitted that the decision relied upon by the Ld.CIT(A) is not applicable to the facts of the present case, because, in the said case, the issue before the Hon'ble Court is alternative claim of the assessee for deduction towards bad debt u/s 37(1) of the Act, when the claim of the assessee has been disallowed u/s 36(1)(vii) of the Act. The Hon'ble Supreme Court, after considering the relevant provisions of the Act, held that when the claim of the assessee is not allowable in terms of specific provisions of section 30 to 36, then section 37 cannot come in. Section 37 applies only to items, which do not fall in section 30 to 36. If a provision for doubtful debt is expressly excluded from sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(2) of the Act and as per the said provision, the only requirement is to write off of bad debts in the books of accounts by debiting to bad debts written off account and crediting to respective debtors account This principle is supported by the Hon'ble Supreme Court in the case of TRF Ltd. Vs.CIT (supra), wherein, it has been clearly held that the only requirement for claiming deduction towards bad and doubtful debts is actual write off of bad debt or part thereof in the books of accounts of the assessee but not beyond and further, the assessee is not required to establish that the debt in fact has become irrecoverable. It is enough if bad debt is written of as irrecoverable in the books of accounts of the assessee. This legal princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer never disputed the fact that the deduction claimed towards bad debts has been written off in the books of accounts of the assessee. The only reason for the Assessing Officer to disallow the claim of the deduction towards bad debt is that the assessee has not established with relevant evidences to show that the debt is in fact bad debt or not. In our considered view, the law is clear from the decision of Hon'ble Supreme Court in the case of TRF Vs. CIT(supra), inasmuch as, once the debt has been written off in the books of accounts as irrecoverable, then it satisfies the conditions for claiming deduction u/s 36(1)(vii) r.w.s. 36(2) of the Act, and further, the assessee does not require to prove that the debt has be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
