TaxTMI 
TaxTMI 
2013 (7) TMI 284
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.... claim of bad debt. The facts in brief are that the assessee who was engaged in the business of trading in petroleum products had claimed deduction on account of bad debt in respect of sales made to M/s Kothari Chemicals and Solve. Ltd amounting to Rs. 32,96,123/-. AO, therefore, asked the assessee to give justification for writing off the debt in respect of above party with which the assessee had done transaction worth Rs. 2,21,72,69/- during the year. The assessee submitted that it had been dealing with Kothari Chemicals and Solve. Ltd for several years together and since they had gone through bad times the entire amount of Rs.32,96,123/- which related to sales made in the earlier years was written off. This had been done to maintain busi....
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....ain the sales were assumed in financial year 2009-09. Thus, accept for two years, the assessee had made sales to the party in all the years prior as well as subsequent years. CIT (A) also observed that it was not explained as to why the amounts were not recoverable from the party and how the write off made resulting into better business prospects and whether it was a prudent commercial decision. CIT (A) further observed that apparently there are no business advantages to the assessee in writing off the debt as sales to the party during the year was only Rs. 22,17,269/- which was a small fraction of total sales of Rs. 7.39 crore. He referred to the judgment of Hon'ble High Court of Bombay in case of Oman International Bank Saog (313 ITR 128)....
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....ore Tribunal. 5. Before us, the learned AR for the assessee reiterated the submissions made before lower authorities that for allowability of claim of bad debt, it was enough if the debt has been written off as irrecoverable in the books and accounts and it has been taken into account in computation of the income of earlier year about which there is no dispute. This position was settled by the judgment of Hon'ble Supreme Court in case of TRF Ltd. (323 ITR 397). Therefore, the claim of bad debt could not be disallowed. Learned DR on the other hand strongly supported the orders of authorities below and placed reliance on the findings recorded in the respective orders. 6. We have perused the records and considered the rival contentions c....
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.... taking action for filing suit for recovery had also expired. Therefore, the assessee considered it wise to write off the amount and start fresh business relations during financial year 2009-10 which is supported by the fact that some fresh sales were made during this year. The claim of bad debt is allowable u/s 36(1)(vii) as per which any bad debt or part there of which is irrecoverable in the accounts of the assessee is allowable as deduction subject to the provisions of sub section (2) of section 36. 6.1. The issue whether the assessee was required to prove or establish that the debt as actually become irrecoverable for the purpose of allowing deduction u/s 36(1)(vii) has been subject matter of dispute for several years and the issue ....
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....ial expediency in particular case. The only aspect which probably can be examined by the Assessing Officer is the genuineness of the write off entry. This aspect has been pointed out by the Hon'ble High Court of Allahabad in case of Kohli Brothers Color Lab Pvt. Ltd. (Supra) in which it was held that the entries could always be examined by AO from the point of view of genuineness. In that case the assessee had not given the complete details about the names and addresses of the persons in respect of which bad debt was claimed. In the present case the complete details of party was available on record but the AO had not brought on record any material to show that the write off entry was not genuine. The assessee also gave the reasons for non r....