Irrecoverable debt deduction requires proof of the year of loss, not a taxpayer's unilateral declaration.

An assessee cannot unilaterally choose the year in which a debt is treated as irrecoverable. Under section 24(1) of the Income-tax Act and Rule 37, deduction is available only if the loss or irrecoverability is shown to have been sustained in the relevant year. A mere declaration by the assessee is insufficient; the fact and timing of irrecoverability must be proved by evidence to the satisfaction of the Income-tax Officer. The burden therefore rests on the assessee to establish that the debt became irrecoverable in the particular year for which deduction is claimed.

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Issues: Whether an assessee is entitled to decide unilaterally the year in which a debt should be treated as irrecoverable, and whether the assessee must prove that the loss occurred in the year for which deduction is claimed.

Analysis: Section 24(1) of the Income-tax Act requires that a loss of profits or gains be established as having been sustained in the relevant year before it can be set off. Rule 37 concerning irrecoverable loans likewise contemplates deduction only when the loan can be definitely proved to be irrecoverable. The assessee's declaration by itself is not enough; the fact and timing of irrecoverability must be proved by evidence to the satisfaction of the Income-tax Officer.

Conclusion: The assessee is not entitled to choose the year of irrecoverability as a matter of mere declaration, and bears the burden of proving that the debt became irrecoverable in the particular year claimed.

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