In ITO v. M/s. Rightex Commerce Pvt. Limited, the ITAT, Kolkata held that deduction I allowable on bad debts once it is written off in the books of accounts of the assessee. While dismissing the appeal filed by the Revenue, the bench clarified that, while invoking such a claim, the assessee need not prove that the debt is irrecoverable.
Coming to the facts of the case, the assessing officer disallowed the claim of bad debt n ground that there was a failure on the part of the assessee to establish that the concerned debts written off as bad had actually become bad during the year under consideration. The assessee impugned the order before the CIT(A) who allowed the appeal.
The bench noticed that he apex Court in the case of TRF Limited, held that as per the amended section 36(1)(vi i) of the Income Tax Act with effect from 01.04.1989, the claim of bad debt is to be allowed once it is written off in the books of account and it is not required for the assessee to prove that the debt written off as bad has actually become irrecoverable. Accordingly, the appeal preferred by the Revenue was dismissed.
Read the full text of the order below.
