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Advance written off

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)

28 February 2015

Friends

Is write off of advance a deductible expenditure in income tax computation.

Regards,

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(Guest)

Yes

Bad Debts of a business are allowable as deduction u/s.36(1)(vii) read with S. 36(2).

The deduction available is in respect of any bad debt or part thereof, which has been taken into account in computing the income of the previous year in which the amount of bad debt is written off or of an earlier previous year, which is written off as irrecoverable in the accounts of the assessee for the previous year.

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 28 February 2015

Thanks Rashid.

My query is not on bad debt of debtors but on advance being written off. Suppose an advnce is given to employee or a supplier and then it is either not adjustible or recoverable.

The, what is the position in income tax law.

Regards,