Case Law Details
Husk Power Systems Pvt. Ltd. Vs DCIT (ITAT Delhi)
ITAT Delhi held that assessee would be entitled for deduction on account of bad debts written off as part of the sales amount is not received.
Facts- AO observed that the assessee had debited an amount of Rs 13,87,981/- on account of bad debts written off in the profit and loss account and claimed the same as deduction in the return of income. The assessee vide order sheet entry dated 17.10.2016 was required to submit the details of bad debts written off and justification for allowability of the same. The ld. AO observed that the assessee did not furnish any details. Accordingly, the ld. AO concluded that assessee had not made out a case for claiming deduction u/s 36(1)(vii) r.w.s. 36(2) of the Act and accordingly disallowed the bad debts written off in the sum of Rs 13,87,981/-.
CIT(A) uphold the action of AO. Being aggrieved, the present appeal is filed.
Conclusion- From the perusal of the order of the ld. CIT(A), it is not in dispute that the assessee had claimed bad debts written off in respect of sales made during the year. This goes to prove that the assessee had indeed offered the sales amount initially to tax which would be in compliance to the provisions of section 36(2) of the Act. Since part of the said sales amount is not received, the assessee had claimed the same as bad debts written off.
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