Deduction for doubtful debts upheld where factual findings showed write-off and non-recoverability, with no perversity found.

Deduction for doubtful debts was upheld where the Tribunal found, on the evidence, that the assessee had written off the amounts in its profit and loss account and had material in the relevant year to conclude that the debts were not recoverable. The High Court treated whether a debt had become bad or doubtful, and whether it had been properly written off, as a question of fact. Finding no perversity in the Tribunal's conclusion, the court declined interference and affirmed the assessee's entitlement to the deduction on those facts.

---

---

Issues: Whether the assessee was entitled to claim deduction of the amount provisioned for doubtful debts in computing total income under the Income-tax Act, 1961.

Analysis: The Tribunal had found, on the facts, that the assessee had written off the amounts in the profit and loss account and that the assessee had material to conclude in the relevant accounting year that the amounts were not recoverable from the concerned companies. The reference did not disclose any perversity in that finding. The issue whether a debt has become bad or doubtful and whether it has been properly written off is a question of fact, and the court found no reason to interfere with the Tribunal's factual conclusion. On that basis, the allowance of the claim was upheld.

Conclusion: The deduction was allowable, and the question was answered in the affirmative in favour of the assessee.

Final Conclusion: The reference was disposed of by affirming the assessee's entitlement to the claimed deduction on the facts found by the Tribunal.

Ratio Decidendi: Where the Tribunal records a supported finding that a debt had been written off as doubtful and that the assessee had material to conclude it was not recoverable, the claim is a factual matter warranting allowance and is not to be disturbed in reference absent perversity.

---