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of <h1>Appellate Tribunal Upholds Allowance of Bad Debt for 2006-07</h1> <h3>Asstt. Commissioner of Income Tax Versus M/s. J. Harkisandas & Co.</h3> Asstt. Commissioner of Income Tax Versus M/s. J. Harkisandas & Co. - TMI Issues:Challenge to deletion of disallowance of bad debt under section 143(3) of the Income Tax Act, 1961 for the assessment year 2006-07.Analysis:Issue 1: Disallowance of Bad DebtThe Revenue challenged the deletion of disallowance of Rs. 2,90,68,996 on account of bad debt by the learned Commissioner (Appeals). The Assessing Officer disallowed the claim as the assessee failed to establish that the debt had become bad, despite writing off the amount in the Profit & Loss account. However, the assessee provided detailed explanations in the notes to accounts and submitted old debtors' accounts to show the irrecoverable nature of the debts. The learned Commissioner (Appeals) accepted the evidence, citing reasonable cause due to the main partner's ill health, and allowed the claim based on the conditions of section 36(1)(vii) r/w section 36(2) and the decision in TRF Limited v/s CIT. The Revenue's objection regarding the previous year of the claimed amount was deemed untenable, and the disallowance was deleted.Issue 2: Judicial ReviewThe Appellate Tribunal confirmed the learned Commissioner (Appeals)'s findings, emphasizing the audited accounts for the financial year 1998-99, which detailed the invoices and the impact of the cyclone at Kandla, leading to the write-off of bad debts. The Tribunal noted the pending proceedings before the Debt Recovery Tribunal, which prevented earlier write-offs. The Tribunal upheld the decision based on the Supreme Court precedent and found no merit in the Revenue's appeal, ultimately dismissing it.In conclusion, the Appellate Tribunal upheld the allowance of bad debt by the learned Commissioner (Appeals) for the assessment year 2006-07, emphasizing the detailed explanations provided by the assessee and the legal compliance with relevant provisions and judicial precedents.
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