Case Law Details
Brief of the Case
Calcutta High Court held In the case of Duncan International Ltd. vs. CIT that Section 36 (2) (iii) allowed the assessee to claim the deduction on account of bad debts in subsequent years even if bad debts have written off in earlier years and which were not allowed. The deduction being allowed on account of bad debt either in the assessment year 1980-81 or in the assessment year 1984-85, though strictly speaking law permits deduction in a subsequent period. But considering that the assessment in the year 1980-81 is also open as the reference is pending before us, we permit the bad debt in the assessment year 1980-81 themselves.
Facts of the Case
The assessee has been trading with Messrs. White Lamb & Finlay Inc. of U.S.A. for a long time and was exporting jute goods to them regularly. In respect of shipments made from 27th July, 1978 covered by 6 bills aggregating to Rs.22, 98,172, the foreign Company failed to honour the bills on presentation even after extending the due dates. The assessee, in the circumstances, wrote off the aforesaid sum of Rs.22, 98,172. The foreign buyer was declared insolvent on 14th April, 1980 though the proceedings had started on 26th July, 1979. The amount was actually written off on 30th September, 1979 corresponding to assessment year 1980-81.
The deduction on account of bad debt, however, was not allowed on the ground that the assessee had failed to establish that the debt had become irrecoverable. The assessee, in the circumstances, once again claimed deduction in the assessment year 1984-85, which was also disallowed on the ground that debts were not written off in the relevant previous year.
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