Write off income shown on accrual basis
This query is : Resolved
09 March 2024
Assessee is an individual who has business income, house property income and also has lent hand loans and declared interest income on accrual basis and filed IT returns. Due to covid, a number of borrowers were unable to repay interest or principal.
Profit and loss account was not given. Few incidental expenses were claimed and net income was offered for tax in the past years.
Since assessee has paid tax on income not earned, he wants to set off such losses against other income like business / rental income. Is there a provision in Income Tax to claim the bad debts in interest receipts, so that assessee can claim the unrealised interest income?
Profit and loss account was not given. Few incidental expenses were claimed and net income was offered for tax in the past years.
Since assessee has paid tax on income not earned, he wants to set off such losses against other income like business / rental income. Is there a provision in Income Tax to claim the bad debts in interest receipts, so that assessee can claim the unrealised interest income?
09 March 2024
Yes, bad debts write off can be claimed as business expenses
11 March 2024
After covid, the assessee has stopped moneylending business. At present, there is no interest income against which loss can be claimed. Can he claim the bad debts from moneylending business (now stopped) against other business income?
12 March 2024
Yes, you can claim it from other business income.
12 March 2024
Thanks for your quick response. If there any case law or section number which specifically allows the losses of past business to be set off against current year business income, can you please give reference of the same?
15 March 2024
Please see the link...
https://cleartax.in/s/bad-debt-doubtful-debt
...
https://cleartax.in/s/bad-debt-doubtful-debt
...
15 March 2024
Thanks, the assessee's moneylending business was discontinued in 2020-21. Assessee's interest and some principal was not paid back. Hence business was discontinued.
The link says bad debts from discontinued business cannot be claimed from other business income in current year.
Please confirm if my understanding is correct.
The link says bad debts from discontinued business cannot be claimed from other business income in current year.
Please confirm if my understanding is correct.
15 March 2024
Your understanding is wrong it's not allowed at that time by AO, as he felt it's recoverable, but later it will be allowed when finally not recoverable.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GSTR-1A How to update Invoice
- Excess salary payment.
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- Stamp Paper for partnership firm change new income tax 2025
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- TDS on Purchase of Immovable Property by NRI from NRI
- Capital gain from sale of house property
- Regarding TDS Applicability For Director Remuneration
- SFT Cash Deposit in Current Account
- FORM 26A APPLICABILITY
- TDS APPLICABILITY......
- Copyright software
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
