2012 (9) TMI 805

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....9. This case pertains to the period prior to 1st April, 1989. 3. The assessee is a State Public Sector Undertaking. It claimed deduction for bad debt under Section 36(1)(vii) of the Income Tax Act, 1961 [for short, 'the Act'], which required two conditions to be satisfied at the relevant time, namely, that (a) bad debt must be established to have become bad in that year; and (b) bad debt should have been written off in the books of account of that year. 4. The question before us is, whether the claim of the assessee satisfies both the afore-stated conditions. 5. The assessee is a State Industrial Development Corporation Limited, Trivandrum. It had advanced loans/credit facilities to M/s. Vanchinad Leathers Limited, a joint sector C....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... appellant satisfied both the conditions for claiming deduction for bad debt under Section 36(1)(vii) read with Section 36(2)(i)(b). Firstly, the appellant is a State Public Sector Undertaking; and secondly, the appellant was the promoter of M/s. Vanchinad Leathers Limited. This aspect has not been considered by the Tribunal. The assessee was in the business of promoting industrial development in the State of Kerala. In the course of the business of the assessee, it had promoted M/s. Vanchinad Leathers Limited. As a promoter, it was in a position to find out whether M/s. Vanchinad Leathers Limited was in a position to carry on business in future. Thirdly, M/s. Vanchinad Leathers Limited was a Joint Sector Company. It was a typical Public/Pr....