S.36(1) (vii):Dedcutions- Bad debt-After 1-4-1989 no requirement that assessee should establish debt to have
become bad.
The assessee-company derived income from carrying out the activity of designing advertisements. In the profit and loss account for the previous year relevant to the assessment year 2008-09, the assessee debited a certain sum as bad debts written off and claimed deduction thereof in computing its total income. The Assessing Officer disallowed the claim of the assessee on the ground that the assessee had not established that the debts had become bad. The Commissioner (Appeals) allowed the deduction. Held, dismissing the appeal, (i) that after April 1, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. That the Assessing Officer was not justified in disallowing the claim for deduction on account of bad debts on the ground that the debts in question had not been established to have become bad. The assessee had given all the details and it was not the case of the Assessing Officer that any other condition for grant of deduction under section 36(1) (vii) of the Act, had not been satisfied. The order of the Commissioner (Appeals) called for no interference. (A. Y.:2008-2009)
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