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of HC allowed the appeal, setting aside the orders of the AO, CIT(A) and Tribunal, and held that the disputed amounts constitute actual bad debts written off (not mere provisions) and therefore qualify for deduction under s.36(1)(vii) where supported by the balance sheet entries. The court emphasized the accounting distinction between a write-off (debit to P&L and credit to sundry debtors) and a provision (credit to provisions/liabilities). It further noted that recoveries, if any, are taxable under s.41(4) and observed that the taxpayer had already declared and paid tax on the subsequent recoveries; accordingly the revenue's disallowance was quashed.
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