https://www.taxtmi.com/caselaws?id=7064 A debt is allowable as a bad debt only if, on the date of write-off, a reasonable and prudent businessman could honestly treat it as irrecoverable on the facts then known; the proviso on later recovery does not prevent consideration of surrounding circumstances, including subsequent conduct, in testing that judgment. Applying that standard, the Bombay HC held that the write-off of a controlled group company's debt was not justified because the debtor continued to carry on business and later dealings showed recovery was not hopeless. The record also supported the finding that the amount had not become bad or irrecoverable during the relevant previous year, so both questions were decided in favour of the Revenue. en-us Tue, 12 Sep 1967 00:00:00 +0530 Sun, 08 Feb 2009 11:13:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=7064 A debt is allowable as a bad debt only if, on the date of write-off, a reasonable and prudent businessman could honestly treat it as irrecoverable on the facts then known; the proviso on later recovery does not prevent consideration of surrounding circumstances, including subsequent conduct, in testing that judgment. Applying that standard, the Bombay HC held that the write-off of a controlled group company's debt was not justified because the debtor continued to carry on business and later dealings showed recovery was not hopeless. The record also supported the finding that the amount had not become bad or irrecoverable during the relevant previous year, so both questions were decided in favour of the Revenue. Case-Laws Income Tax Tue, 12 Sep 1967 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=7064