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Provision for bad debts under income from business and profession
what is the treatment for provisions and reserves for bad debts? One of my lecturer says that if only provision for bad debts is charged in income statement and no bad debts is charged, the provision shall be assumed to be actual bad debts and is admissible. Can it be considered, because i dont find any adjustment of that nature in the act?
Replies (5)
Only actual bad debts allowed.
Provision for bad debts is disallowed.
The provision for bad and doubtful debts, if any, made in the books of account, shall be added back to the profit and loss account.
Pl see:
/articles/bad-debts-provisions-of-bad-debts-15545.asp#.U1dHeFWSx7s
it will be added back except in case of banking companies
Satyadeo is true. I.e exacept banking co. P B D is disallow. Refer section 36(1)(vii) and 36(1)(viiia)
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