If debt become irrecoverable then assessee can writes off it as Bad Debts

PCIT Vs Homi Mehta & Sons Pvt. Ltd. (Bombay High Court) Assessee had advanced loans to its subsidiary company. The loan was interest bearing. The Respondent- Assessee claimed that the subsidiary company became loss making company and the Respondent- Assessee took a decision to write off the loan and claim the same as bad debts. The said claim has been denied by the Assessing Officer on two counts (i) that the Respondent- Assessee was not in the business of giving loans and, therefore, conditions of section 36(2) of the Income Tax Act, 1961 were not satisfied and (ii) that the claim of th...