1953 (9) TMI 17

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....come-tax Act and Section 21 of the Excess Profits Tax Act read with Section 66(1) of the Income-tax Act. 2. One of the grounds of appeal related to a claim of bad debts in respect of two items, Rs. 57,358 and Rs. 9,125. The Income-tax Officer rejected the claim of the assessee. He wrote :                " The assessee has debited Rs. 57,358 and Rs. 9,125 to the profit and loss account and credited to Sukhbawd Lena account and Shah account (doubtful debts and suspense account) stating that the debts being doubtful of recovery have been written off to the profit and loss account. The individual accounts have however been carried forward. Thus it is nothing but a reser....

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....Section 10(2)(xi) of the Income-tax Act. 4. The relevant part of Section 10(2)(xi) reads : " but not exceeding the amount actually written off as irrecoverable in the books of the assessee ". The assessee opened an account style " doubtful debts and suspense account. " The amount of these debts was credited to this account and a corresponding debit given to the profit and loss account. The department's contention before the Tribunal was that, unless the personal accounts of the debtors are credited and closed, there can be no writing off the debts. The Tribunal disagreed with that view. In the opinion of the Tribunal, the writing off must be to the debit of the profit and loss account. The order of the Tribunal is annexure " A " and f....

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....ermissible deduction a sum of Rs. 66,483 in the relevant year, and his case was that this amount represented debts which were irrecoverable, and it is not in issue that these debts were irrecoverable. The only point urged by the department before the Tribunal was that they had not been written off as required by the section and therefore they were not permissible deductions. Now, what Section 10(2)(vi) requires is that the amount must be actually written off as irrecoverable. What the assessee did in this case was that he debited two amounts of Rs. 57,358 and Rs. 9,125 to the profit and loss account. Rs. 57,358 was credited to Asami Sughbawd Lena account, which means persons who have become insolvent or who have failed to pay and the ent....