deduction of bad debt

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CA Milap Mehta (Querist)
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28 February 2008 is it necessary that a person must be declared insolvent by court b4 deducting bad debt in case of share brokings?

CA. GOPAL SONIKA

CA. GOPAL SONIKA (Expert)
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28 February 2008 No not necessary

R.V.RAO

R.V.RAO (Expert)
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28 February 2008 WHILE IT IS NOT NECESSARY THAT A PERSON SHALL BE DECLARED AS INSOLVENT BEFORE DEDUCTING BAD DEBTS, IT IS ESSENTIAL TO PRODUCE DOCUMENTARY EVIDENCE BEFORE THE ASSESSING OFFICER THAT INSPITE OF BEST EFFORTS OF FOLLOW UP FOR RECOVERY, THE DEBT HAS BECOME BAD .
IF AVAILABLE YOU CAN SHOW PROOF OF INSOLVENCY OF THE DEBTOR (DIRECT OR IMPLIED EVIDENCE IF GENUINE IS ACCEPTABLE AS EVIDENCE).
ALSO PRODUCE ALL DOCUMENTS LIKE LETTERS, MAILS, POSTAL CORRESPONDENCE OF YOUR FOLLOW UP WITH YOUR DEBTOR. HIS ACCEPTANCE OF THE DEBT BEFORE INSOLVENCY IS NECESSARY. PL. ENSURE THAT HE HAS NOT DENIED OR DISPUTED ANY GENUINE DUES AT ANY TIME IN WRITING OR APPROACHED ANY COURT OF LAW WITH THE SAID DISPUTE.
ALL ABOVE PRECAUTIONS WILL ALLOW YOUR BAD DEBT TO BE DEDUCTIBLE.
R.V.RAO

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)
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28 February 2008 ALREADY ANSWERED

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