TaxTMI 
TaxTMI 
2016 (1) TMI 944
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....ssessee towards claiming bad debt was not bonafide and honest as the amount shown as bad debt was never shown as income in the preceeding years and the money was not held as stock in trade as the assessee was not engaged in the business of money lending ? 2. Whether on the facts and in the circumstances of the case, the ld. Tribunal has erred in deleting the disallowance made by the Assessing Officer without considering the conditions stipulated under section 36(i)(vii) read with section 36(2) of the Income-tax Act and only concentrating on the fact that the loan has become irrecoverable irrespective of the basis of legal requirement for allowing any debt as bad debt ?" The assessee had shown and/or claimed bad debt in a sum of Rs. 2,7....
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....nt should be written off as irrecoverable in the accounts of the assessee for that accounting year in which the claim for deduction is made. Considering the facts of the case, I find the appellant company has fulfilled all the conditions laid down in the aforesaid sections. In fact, the A.O. has allowed the interest portion on such loan amounting to Rs. 458660/- as bad debt during the relevant previous year. From the Audited accounts of the year it is apparently clear and evident that the appellant company has been carrying on the business of lending and investment and has also earned huge interest on such money lending business as indicated in the above figures. The amendment of Section 36(1)(vii) by Finance Act w.e.f. 01-04-89, the assess....
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.... held that "Under the provisions of section 36(1)(vii) as in force from April, 1989, all that the assessee had to show was that the bad debt was written off as irrecoverable. It is upto the assessee to be satisfied that the debt is not recoverable and once such satisfaction is reached and the amount is written off in the account, the same is to be allowed. Hon'ble Calcutta High Court in the case of CIT -Vs - Coates of India Ltd. (1998) 232 ITR 324 (Cal.) has held that "In order to claim deduction under Section 36(1)(vii) of the Income Tax Act, 1961, as it stood at the relevant time, the assessee is required to show that, on the facts and circumstances pertaining to a particular debt, he has taken an honest judgment that the said debt has be....