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TaxTMI 
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TaxTMI 
2014 (11) TMI 1298
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.... Section 40(a)(ia) and 194C of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The brief facts of the case are as under:- It was observed by the Assessing Officer that service charges had been paid to following persons:- Sl. No. Name Amount 1 Sri Ranju Motilal 145000 2 Sri Ashim Bakshi 47500 3 Sri Aurobinidu Halder 32800 4 Sri Balaram Maity 28000 5 Sri Ranjit Roy 72000 6 Sri Tapan Roy 25800 The assessee deducted tax at source from payment made to Ranju Motilal. No deduction was made from remaining payments. It was contended by the assessee that these personnel carried on specific job and the payments were in the nature of salary but to avoid certain technical problem the ....
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....Motilal. Once queried by the Assessing Officer, it was for the assessee to show that TDS was not required to be made for services rendered by these persons. Therefore it was for the assessee to show the nature of service rendered by these persons and not for the Assessing Officer to bring evidences on record. Appellant has not given the nature of service rendered either before the Assessing Officer or before me, during the course of appellate proceedings to show that service rendered by these persons were not cove read u/s. 194C or Sec. 194J. Simply making statements that service contract is not covered u/s. 194C without telling the nature of the service rendered will not help the assessee. In absence of any explanation regarding service re....
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....irming the disallowance of Rs.8,97,676/- as bad debt. 5. On this issue assessee has claimed a sum of Rs.8,97,677.72 as bad debt on account of M/s Unique Agencies. AO observed that the entry pass in the book was bad debt account was debited and bad debt reserve account was credited. Hence, AO opined that bad debt of Rs.8,97,676/- which was written off as claimed of deduction has not been written off in reality, but transferred to reserve for bad debts account. The Assessing Officer was of the opinion that the transfer to reserve account tantamount to creation of provision of bad and doubtful debt and that amount had not been written off in reality. The Assessing Officer was of the opinion that with the amendment to Sec. 36(1)(vii) with effe....
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....nt for the assessee to write off the bad debt in the account in order to have the same allowed as deduction and it is no longer mandatory on the part of the assessee to show that the debt has become practically bad. It was further submitted that reliance of the Assessing Officer on the decision in the case of Kerala Industrial Development Corporation Ltd, 281ITR 413 and Micro Max System Pvt. Ltd. 277 ITR 409 (Mad) were not applicable in the case of the assessee. 6. Considering the assessee's submission, Ld. CIT(A) opined that assessee has not written off the debts in its book that the assessee has credited the reserve of bad debt only the amount has been transferred from the individual ledger account. This reserve for bad debt accounts is ....
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....ot include any provision for bad and doubtful debts made in the accounts of the assessee. 10. From the above, it is ample clear that to quantify for deduction as bad debt the amount has to be written off as irrecoverable in the accounts and this shall not include any provision made for bad and doubtful debts made in the accounts of the assessee. We further find that similar issue was under consideration by the Hon'ble Madras High Court in the case of Micromax Systems P. Ltd. (supra). In the said case, Hon'ble Madras High Court has held as under:- "Thus prior to April 1, 1989, even if the debt has not been written off as irrecoverable in the accounts of the assessee, it could still be allowed as a bad debt if the assessee could establish ....