Allowability of provision
This query is : Resolved
09 November 2011
In Assessment year 1997-98, we had made a provision for doubtful Advances in the books of Accounts. The same had already added back in the total income for the same A.Y.
Now in current assessment year, we have to write back the said doubtful provision.
So my question is, whether the said expenditure is allowable as deduction u/s 36(1)(Vii) of the income tax act.
Please clarify the same.
Now in current assessment year, we have to write back the said doubtful provision.
So my question is, whether the said expenditure is allowable as deduction u/s 36(1)(Vii) of the income tax act.
Please clarify the same.
09 November 2011
Deduction U/s 36(1)(vii) is allowable in case of Bad Debts is written off.
Only on the basis of creating and writing off of provisions do not allow the assessee to claim the expenditure.
.
The most important thing about bad debt is
it should be a debt. An advance may not be a debt, when it is not covered under the normal business of the assessee.
.
Long Back in 1997-98, when you have created provision , then it was done by debiting the P&L A/c.
.
Now it can be reversed only by making a reverse entry in Credit of P&L.
.
As it is not a income, you can deduct it
from your Net Profit while computing the business income.
Only on the basis of creating and writing off of provisions do not allow the assessee to claim the expenditure.
.
The most important thing about bad debt is
it should be a debt. An advance may not be a debt, when it is not covered under the normal business of the assessee.
.
Long Back in 1997-98, when you have created provision , then it was done by debiting the P&L A/c.
.
Now it can be reversed only by making a reverse entry in Credit of P&L.
.
As it is not a income, you can deduct it
from your Net Profit while computing the business income.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- House Property Reporting in ITR
- Internship/Academic shown in Salary Pay Slip of a Doctor
- TDS Claim year
- Rent lease agreement
- Liable to deduct tds and 44ADA
- Relief u/s Section 89
- Refund of 20%pre-deposit paid for stay application
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- TDS Challan Code
- Supply through E-commerce Operators
- STCG on ETF gold & silver
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
