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of <h1>Bad Debt Deduction Permissible Under Section 36(1)(vii) If Written Off as Irrecoverable in Assessee's Books</h1> A bad debt can be deducted under Section 36(1)(vii) of the Income Tax Act if it is written off as irrecoverable in the assessee's books for the relevant year. The debt must have been considered in the income computation for that year or earlier, or it should be from money lending or banking activities. The deduction applies only to debts written off, not provisions for doubtful debts. Establishing that a debt is irrecoverable is unnecessary; writing it off suffices. The debt must be revenue in nature, related to the assessee's business, and accounted for in income computation. Subsequent recoveries of such debts are addressed under Section 41(4).
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