2015 (4) TMI 836

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.... and was exporting jute goods to them regularly on 120/150 days D.A. basis. However, in respect of shipments made from 27th July, 1978 covered by 6 bills aggregating to Rs. 22,98,172.20, the foreign Company failed to honour the bills on presentation even after extending the due dates at their request in January and February, 1979." The assessee, in the circumstances, wrote off the aforesaid sum of Rs. 22,98,172.25p. The foreign buyer was declared insolvent on 14th April, 1980 though the proceedings had started on 26th July, 1979. The amount was actually written off on 30th September, 1979 corresponding to assessment year 1980-81. The deduction on account of bad debt, however, was not allowed on the ground that the assessee had failed ....

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....gard to the bad debts was difficult for the assessee. The aforesaid opinion was worded as follows:- "The present income-tax law with regard to bad debts makes the position of the assessee extremely difficult. He may write off a debt in a particular year and may claim it and the claim may be disallowed. In the next year he cannot make that claim because it would be urged against him that he did not write off the debt in that year. Therefore, the assessee always finds himself on the horns of a dilemma and it is the duty of the Department to take a sympathetic view of the matter if in fact the debt was never recovered. Therefore, if the debt was not allowed to the assessee in the year of account, there is no reason why the Department should....

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....ment in the year 1980-81 is also open in the sense that the reference is pending before us, we think proper course would be to permit the bad debt in the assessment year 1980-81 itself. Any other view would involve the assessee in unnecessary prejudice. As of date, nobody can doubt the debt had become bad in the assessment year 1980-81. The assessee did not have any doubt when he wrote it off. We find that Reserve Bank of India has also, subsequent to the aforesaid assessment year, permitted the assessee to write off the amount. When law permits the assessee to get the deduction, there is no reason why the assessee should not be given the deduction in the assessment year 1980-81 itself. Any other course would involve the assessee in the lia....