bad debt

Manori Properties Pvt. Ltd., Vs. Income Tax Officer 6(3)(3), Mumbai.The appellant has purchased debts of amount due to Rose Patel Mercantile Co. Ltd. for Rs.10,85,000/- by paying the said amount on 10-1-1996 Rs. 5,00,000/- and on 29-1-1996 Rs. 5,85,000/-. The amount was due from Qualitron Components Ltd. Unfortunately due to losses the company closed down its operations and ultimately wound up by the order of Gujarat High Court. The Assessing Officer has clearly pointed .. Full Article

In the present case, we are of the opinion that even if the websites had materialized, the expenditure could not have been viewed as capital expenditure because the website is put up for the purposes of day-to-day running of the business and even if one were to view that some enduring benefit is obtained by the assessee, the benefit cannot be said to accrue to the assessee in the capital field. A website is something where full information about the assessee’s busines.. Full Article

It is not necessary that the entire amount of debt had to be taken into account in computing the income of the taxpayer. Even if a part of the debt was considered, it was sufficient compliance of provisions of ITA for allowance of such bad debt as he Full Article

To claim debt as bad debt and as a deduction, the debt should be in respect of business, which is carried on by the assessee in the relevant assessment year Full Article

The assessee, a broker, claimed deduction for bad debts in respect of shares purchased by him for his clients. The AO rejected the claim though the CIT (A) upheld it. On appeal by the Revenue, the matter was referred to the Special Bench. Before the Special Bench, the department argued that u/s 36(2), no deduction on account of bad debt can be allowed unless “such debt or part thereof has been taken into account in computing the income of the assessee”. Full Article

In order to claim a bad debt as a deduction under section 36(1)(vii) of the Income tax Act (Act) it has been a long drawn controversy between the Taxpayer and the Revenue whether in addition to write-off the debt in the books of account, it is obligatory on the Taxpayer to establish that such debt has become a bad debt, especially after the amendment brought in by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1 April 1989. Full Article

Unfortunately, for the appellant NBFCs. are not covered by Section 36(l)(viia) of the I.T Act and so much so, explanation to section 36(l)(vii) squarely applies or in other words, the appellant-N. B.F.Cs. are not entitled to deduction of any Provision created for bad and doubtful debts, no matter such provision is created based on the guidelines issued by the R. B. I. Consequently, we uphold the order of the Tribunal and dismiss the Income-tax Appeals. Full Article

provision of Section 143 (2) of Income Act viz-aviz section 36(1)(vii) of the Income Tax Act, 1961 read with section 36(1) both would be harmonized to give purposeful meaning to both the statutory provisions, as one extends benefit to the respondent-assessee of deduction for their debt or part thereof becoming bad and other authorizes Assessing Officer to see that provision of Income Tax Act are not flouted by any means. Full Article