deduction of bad debt
This query is : Resolved
CA Milap Mehta
(Querist)
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
(Expert)
28 February 2008
No not necessary
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
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
28 February 2008
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