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Disallowance of loans and advances written off as bad debts

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Querist : Anonymous

Querist : Anonymous (Querist)

23 May 2013 This is the case of a listed public limited company. The company decided to write off an advance of Rs. 700,000/- grouped under (Loans and advances) given during the year and the same was approved through a board resolution. The corresponding debit was given to Bad debts written off a/c. Now, the question arises as to whether this is an allowable expenditure under sec36 of the IT act as the advance given was not in the nature of trade advance.

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Guest (Expert)

24 May 2013 If the loan granted was not in the nature of trade advance, moreover if the company is not a financial institution.

In that case, the company can not claim such written off expenditure as allowable expenditure under the income tax act.

No section will allow such admissibility.

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