2015 (5) TMI 80

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....RDER P.C. 1. By the present appeal, the Revenue has proposed the following question as a substantial question of law : "(i) Whether, on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in allowing the assessee's claim for Bad Debts by relying only on provisions of Section 36(i)(vii) of the Income Tax Act, 1961, ignoring the fact that the ass....

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....his amount as bad debts is contrary to the provisions of section 36(1)(vii) of the Act. He, therefore, concluded that write off is bad and added the same to the income. The assessee preferred an appeal before the Commissioner of Income Tax on 20.1.2011. The Commissioner set aside the order of the Assessing Officer. 3. Being aggrieved by the order, the Revenue preferred an appeal before the Hon&....

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....eme Court held that when bad debts occurs, the bad debt account is debited and the account of the customer is credited, thereby closing the account. 5. It will be useful to reproduce provisions of section 36(1)(vii) of the Act both prior and post 1st April, 1989 : "Pre-1st April, 1989: 36. Other deductions (1) The deductions provided for in the following clauses shall be allowed in respec....

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.... covered, there was no occasion for the Assessing Officer to disallow the write off on the ground that no attempts have been made to recover the same. The assessee acquired a proprietory concern M/s.Sharda International and the assets in the form of advances of the balance sheet of two entities were part of the acquisition. These advances were bad debts and were written off under the provisions of....