Law:

Section:

Section 36(1)(vii) of the Income-tax Act, 1961 - Bad debts - Assessment year 1990-91 - Whether in order to enable an assessee to claim deduction of an amount which he/she claims to be a bad debt, it is necessary for him/her to show that such debt or its part thereof is taken into account in computing income of assessee of previous year and it is written off - Held, yes - Whether where requisite conditions as provided in section 36(2)(i) are satisfied, assessee would be entitled to claim deduction to extent amount is declared as written off in previous year - Held, yes FACTS The assessee filed return in her capacity as individual and claimed that the loan amount given to the company had become a bad debt, therefore, same was liable to be written off as contemplated under section 36(2)(i). The assessee's case was that she had given a loan to a company and the said company failed to pay the loan amount and subsequently, the BIFR declared the company to be sick and directed the business of the company to be closed. The Assessing Officer rejected the assessee's claim. On appeal, the Commissioner (Appeals) set aside the order of the Assessing Officer. On appeal the Tribunal upheld the order of the Assessing Officer. HELD In order to enable an assessee to claim deduction of an amount which he/ she claims to be a bad debt, it is necessary for him/her to show that such debt or part thereof is taken into account in computing the income of the assessee of previous year and it is written off. In other words, what is required to be seen is whether the assessee has declared the debt to be a written off debt in the previous year in his/her accounts or not? If it is so shown, then the assessee is entitled to claim deduction of that portion of the amount which is declared as written off in the year in question. [Para 12] The assessee was able to prove the requirement of section 36(2)(i) in the instant case in relation to the amount in question and, hence, was entitled to claim deduction of the said amount as bad debt. Though neither the Assessing Officer nor the Commissioner (Appeals) nor the Tribunal had recorded a categorical finding as to whether that particular amount was…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492