Law:

Section:

Section 36(1)(vii) of the Income-tax Act, 1961 - Bad debts - Assessment years 1989-90 and 1991-92 - Assessee was following practice of creating a provision on account of bad & doubtful debts, by first debiting it in its profit & loss account, and then adding it back while computing its total income - Subsequently, some amount was received, that was shown as credit in profit & loss account, but was not offered for taxation - On said facts Assessing Officer opined that assessee had added a sum of Rs. 8.74 lakhs, on account of provision for bad & doubtful debts, while sum written back was a sum of Rs. 39.56 lakhs, and difference of amount was liable to tax - Commissioner (Appeals) took view that when amount for which provision had been made in earlier years had already been subjected to tax, then if amount was received in subsequent years, that amount could not be taxed twice over - Tribunal held that if assessee had claimed deduction on account of provision in earlier years, of course written back amount could be liable to tax, but then, if no deduction had been claimed, when provision was made, subsequent realisation from debtors could not be charged to tax - Whether, on facts, finding recorded by Tribunal was perfectly in accordance with law - Held, yes K.K. Bissa for the Appellant. Anjay Kothari for the Respondent. ORDER 1. These two appeals arise out of by the common order passed by the Tribunal, dated 20-2-2007, and relating to the assessment years 1989-90 and 1991-92. 2. The controversy involved is very short, inasmuch as the assessee was following a practice of creating a provision, on account of Bad Doubtful Debts, by first debiting it in its Profit Loss Account, and then adding it back while computing its total income. Thereafter, in later year some amount was received, that was shown to the credit in Profit Loss Account, but was not offered for taxation. It is on these facts, that the Assessing Officer observed, that for the assessment year 1989-90, the assessee had added a sum of Rs. 8.74 lakhs, on account of provision for Bad Doubtful Debts, while the sum written back is a sum of Rs. 39.56 lakhs, and the difference amount has been…

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