IT SECTIONS FOR LAPSED GOVERNMENT CLAIMS

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This discussion explores the Income Tax sections applicable to lapsed government claims, bad debts, and GST payments within the Profit & Loss Account. Section 36(1)(vii) addresses bad debts, while Section 37(1) provides a broader allowance for business expenditures, provided they meet specific criteria such as being incurred wholly and exclusively for business purposes during the previous year and not being capital or personal in nature.

TARIQUE RIZVI

TARIQUE RIZVI (Querist)
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18 December 2020 Respected Sir,

As under which section of income tax lapsed gst claim is allowable in Profit & Loss Account ?
Please guide me & oblige.

TARIQUE RIZVI

TARIQUE RIZVI (Querist)
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18 December 2020 The same way bad debts, balances written off, and GST payment against demand, Late filing fees, and penalties etc etc

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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31 October 2021 Section 36(1)(vii) : Bad Debts
Section 37(1) :Any expenditure (not being expenditure of the nature described in sections 30 to 36) and not being in the nature of capital expenditure or personal expenditure of the assessee, laid out or expended wholly and exclusively for the purposes of the business or profession, shall be allowed as deduction in computing the income chargeable under the Head "Profits and Gains of Business or Profession".

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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31 October 2021 Conditions for Allowance under Section 37(1) :
Such expenditure should not be covered under the specific sections, i.e. sections 30 to 36.
Expenditure should not be of capital nature.
The expenditure should have been incurred during the previous year.
The expenditure should not be of a personal nature.
The expenditure should have been incurred wholly or exclusively for the purpose of the business or profession.

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