Debtors written off

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Querist : Anonymous

Querist : Anonymous (Querist)

19 December 2009 debtors written off in p&L appropriation account instead of p&L. IN such bad debt written is allows as per iNcome tax act If yes please provide the case law and if no also provide the case law. Case law should be of atleast ITAT level

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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19 December 2009 If the amount has been written off in the books of account; it does not matter how it has been written off.

As per E L Kohler,write off means "to transfer the balance of an account previously regarded as an asset to an expense account or to profit and loss account."

It is not necessary that debtor's individual account should be written off.

Even if the credit is made in a "bad debt reserve account" against debit to the profit and loss account indicating that the entry refers to amount due by the particular debtor; the writing off is complete.

- Vithaldas H Dhanjibhai Bardanwala v. CIT (1981) 130 ITR 95 (Guj.)

Since by mistake only you have debited it to Profit and Loss Appropriation Account; still the accounting is complete as writing off has been made in the books. Without passing an entry into the books; how it can be appeared ?

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