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[2007] 291 ITR 228 (RAJ.) HIGH COURT OF RAJASTHAN Kashmir Trading Co. v. Deputy Commissioner of Income-tax RAJESH BALIA AND GOPAL KRISHAN VYAS, JJ. D.B. CIVIL IT APPEAL NO. 75 OF 2006 SEPTEMBER 11, 2006 Section 36(1)(vii) of the Income-tax Act, 1961 - Bad debtsX â–  Requirement of sub-section (2) is to be established even in case where a sum is written off in books of account as an irrecoverable debt; enquiry into conditions required under sub-section (2) is still required to be made but such enquiry is required to be made only when a debt is written off in books of account [Assessment year 1999-2000] Sub-section (2) of section 36 makes it abundantly clear that merely writing off any amount as a bad debt in the books of account as irrecoverable does not result in deducting said sum while computing taxable income in accordance with the provisions of Act. The requirement of sub-section (2) is to be established even in case where a sum is written off in the books of account as an irrecoverable debt. The enquiry into condition required under sub-section (2) is still required to be made but such enquiry is required to be made only when a debt is written off in the books of account. Therefore, it becomes a condition precedent before any claim for deduction on account of debt becoming bad is inquired into. In the absence of such entries made in the books of account, the process of examining the claim with reference to sub-section (2) of section 36 does not commence. Where the assessee had not passed entries for writing off bad debt and further the bad debt had been disallowed by the Tribunal considering the material on record by finding as a fact that the debt had not been recoverable during the previous year relevant to the assessment year in question, that was a finding of fact from which no question of law arose. JUDGMENT Rajesh Balia, J.-Heard learned counsel for the appellant. 2. This appeal is under section 260A of the Income-tax Act, 1961, by the assessee. The assessee suggested the following substantial questions stating them to be substantial questions of law arising for consideration in this appeal : "1. Whether the hon'ble Tribunal was justified in not…

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