Bad debt deduction for written-off trade receivables was allowed where income had already been taxed and books were duly adjusted.

Trade receivables arising from invoices for ices rendered were written off in the books, and the related income had already been offered to tax; on that basis, the deduction as bad debt under section 36(1)(vii) was allowable. The claim could not be rejected merely because actual irrecoverability was not separately proved, and the disallowance was deleted in favour of the assessee.

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Issues: Whether the assessee was entitled to claim deduction of the disputed trade outstanding amounts as bad debts under section 36(1)(vii) of the Income-tax Act, 1961.

Analysis: The disputed amounts represented invoices raised for services rendered and were reflected in the books by reducing sales and debiting the respective parties. The amounts were written off in the books of account, and the income had already been offered for tax. Once these conditions were satisfied, the claim could not be denied merely because the assessee did not establish actual irrecoverability.

Conclusion: The claim was allowable as bad debt, and the disallowance was deleted in favour of the assessee.

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