Income Tax : Explore recent Supreme Court rulings (2023) on income tax issues. Highlights of key cases, analysis, and implications....
Income Tax : Section 36 – Other Deductions Section 36 of the Indian Income Tax Act, 1961, provides a list of explicit deductions for computin...
Income Tax : The Delhi High Court, has held in CIT vs. Samara India(P) Ltd. (2013) 216 Taxman 93 , following the decision of Supreme Court in T...
Income Tax : In this discussion, we would take up Section 36(1)(iii) of the Income Tax Act, 1961 and analyse the provision therein from all fa...
Income Tax : ection 55 (2)(b) of the Income Tax Act, 1961 provides the option to the assesse to consider the fair market value of capital asset...
Income Tax : ITAT held that Accounting Standard-19 governs accounting treatment but does not determine tax treatment under the Income-tax Act. ...
Income Tax : The Bombay High Court held that bad debt deduction cannot be denied where the debt was effectively written off through accounting ...
Income Tax : ITAT Bangalore held that an assessment order passed in the name of an amalgamated bank after it had ceased to exist is void ab ini...
Income Tax : The ITAT held that reassessment initiated beyond four years cannot survive unless the Assessing Officer records that the assessee ...
Income Tax : The Bangalore ITAT held that an assessee need not prove that a debt has actually become irrecoverable to claim a bad debt deductio...
Once it is borne out from the record that the assessee had borrowed certain funds on which liability to pay tax is being incurred and on the other hand, certain amounts had been advanced to sister concerns or others without carrying any interest and without any business purpose, the interest to the extent the advance had been made without carrying any interest is to be disallowed under Section 36(1)(iii) of the Act.
ACIT Vs Ashima Dye cot Pvt. Ltd. (ITAT Ahmedabad)- After the amendment of section 36(1)(vii) of the Income-tax Act, 1961, with effect from April 1, 1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable: it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee.
JCIT Vs M/s Videocon Industries (ITAT Mumbai) – It is seen on perusal of the assessment records of assessment year 1999-2000 that the loss on sale of shares on SMS Pharmaceuticals has been declared as long term capital loss. This shows that the transaction in respect of the purchase and sale of shares of SMS Pharmaceuticals are nothing but transfer of capital asset and not part of the business of the assessee company. This fact is evident from the assessment records of previous assessment years wherein the shares have been shown as investments. In view of the above, the claim of the assessee company that the said loss of Rs.95,00,000/- should be allowed as a business loss and thereby writing it off as bad debt under section 36(1)(vii) of the Income Tax Act cannot be allowable as the conditions laid down by section 36(1)(vii) of the Income Tax Act, 1961 are not satisfied by the assessee company .
Hindustan Platinum Pvt. Ltd. Vs ACIT (ITAT Mumbai)- Statement given u/s 131 cannot be the only basis for disallowing the claim of depreciation when it is shown with documentary evidence that the admission made in the statement recorded was under a mistake or misapprehension. Assessee is not entitled to claim loss u/s 28 on account bad debt of the advance given as inter corporate deposit without establishing the fact that it was a trade advance
Where the assessee-bank has instituted recovery suits in Courts against it’s debtors, if individual accounts are to be closed, then the Debtor/Defendant in each of those suits would rely upon the Bank statement and contend that no amount is due and payable in which event the suit would be dismissed.
In a recent ruling Supreme Court in the case of TRF Ltd. on the issue of whether a taxpayer, while claiming deduction of bad debts in its return of income, is required to establish that the debts have, in fact, become irrecoverable. The SC held that post the amendment to Section 36(1)(vii) (Section) of the Indian Tax Law (ITL), for claiming deduction of bad debts
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.
