Bad-debt write-offs require statutory conditions and accounting irrecoverability; documented expired inventory write-offs remain allowable when supported by evidence.

Documented inventory write-offs for expired stock are allowable where item-wise particulars, physical verification, and evidence of expiry and destruction support the claim. Concurrent factual findings that stock was old and expired do not raise a substantial question of law. Bad-debt write-offs are allowable when the conditions under the Income-tax Act are satisfied through debtor records, invoices, ledger accounts, and ageing analysis; once a debt is written off as irrecoverable in the accounts, separate proof that it had actually become bad is unnecessary. Challenges on these two write-offs failed, while issues concerning subsidiary investments and advances were admitted for further consideration.

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Issues: (i) Whether the inventory write-off for expired stock was allowable; (ii) Whether the bad-debt write-off was allowable.

Issue (i): Whether the inventory write-off for expired stock was allowable.

Analysis: The write-off was supported by item-wise stock particulars, physical verification, and documentary material establishing expiry and destruction of stock under applicable regulatory norms. The concurrent factual findings of the first appellate authority and the Tribunal established that the inventory was old and expired. The challenge raised no substantial question of law.

Conclusion: The inventory write-off was allowable, in favour of the assessee.

Issue (ii): Whether the bad-debt write-off was allowable.

Analysis: The assessee produced debtor details, invoices, ledger accounts and an ageing analysis supporting the write-off. The requirements under Section 36(1)(vii) read with Section 36(2) of the Income-tax Act, 1961 were satisfied. Once the debts were written off as irrecoverable in the accounts, proof that they had actually become bad was not required.

Conclusion: The bad-debt write-off was allowable, in favour of the assessee.

Final Conclusion: The challenges concerning the inventory and bad-debt write-offs failed for want of a substantial question of law; the questions concerning write-off of subsidiary investments and advances were admitted for further consideration.

Ratio Decidendi: Concurrent factual findings supported by documentary evidence do not give rise to a substantial question of law, and a bad-debt deduction is available where the statutory conditions are met and the debt is written off as irrecoverable in the accounts.

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