Can bad debt be claimed after 3 yr.s?

This query is : Resolved

Ganu (Querist)
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24 August 2011 income was recognized 3 years before. and till now there is case going on for the recovery of income.. and it is almost irrecoverable as per our judgement.. so how to recognize it as bad debts? can it be deducted in deferred manner as the amount is big of Rs 20 lacs, so it will lead to loss for the current year? give me reply as fast as possible.. it's very urgent for me

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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24 August 2011 Bad debts is allowed only when you write it off in your books. Only provisions shall not be allowed

CA. Nityananda Parida

CA. Nityananda Parida (Expert)
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24 August 2011 As far as Accounts is concerned:

When you are certain that amount is no more recoverable, you have to account for as bad-debt in current year irrespective of amount involved and it's impact on current year bottom line. In case of otherwise you are deviating from accounting standards and auditor may qualify his audit report.

As far as Income Tax concerned:

3 Year is not an issue for claiming it as bad-debt. When ever you are writing off an account which has already routed through P & L account in any previous year or current year ,there will be no objection of tax authorities. You can absolutely claim it as expense.

CA. Anoop Gadia

CA. Anoop Gadia (Expert)
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24 August 2011 after legal judgement you can claim bed debt in the year in which judgement received and you can also claim exp. on the case.

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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24 August 2011 Bad debts can be only claimed only when it is written off.

Also in a recent case law of Vijaya Bank Ltd. given by Honourable supereme court, even provision will be allowed as bad debt if you deduct the same from the debtors balance in the balance sheet side.

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