Bad debt

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 April 2013 Dear Experts,

What kind of documentary evidence can be arranged for in support of BAd Debts?

In case of foreclosure of loan,should the amount settled be adjusted against the accrued interest first and then against the principal?

Regards,

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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19 April 2013 The amount settled, shows some sort of agreement between the parties which can be reduced in writing so that it may have multiple utilities.
.
In my view, When a settlement is arrived at, it can not be said that the Debt had become bad. What we offer to the debtor is something in kind of a discount or waiver.
It should be shown accordingly.
.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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19 April 2013 1. To claim deduction u/s 36(1)(vii) no need of documentary evidence is required w.e.f 01/04/1989.
Ref :- Direct Tax Laws (Amendment)Act 1987.

2. Depends on the terms of the foreclosure agreement.

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