ADVANCE ADJSUTMENT

 Given the situation, you can write off the loan and advances as bad debts, but there are specific conditions and procedures to follow:

Conditions for Writing Off Bad Debts:

1. *Provision for Bad Debts*: You must have made a provision for bad debts in the previous years' financial statements.

 2. *Reasonable Certainty*: You must be reasonably certain that the debt is irrecoverable.

3. *Written Off*: The debt must be written off in the books of accounts. .

Procedure for Writing Off Bad Debts:

1. *Pass a Board Resolution*: Pass a board resolution to write off the bad debt.

2. *Make a Provision*: Make a provision for bad debts in the financial statements.

 3. *Write Off the Debt*: Write off the debt in the books of accounts. Tax Implications:

 1. *No Tax Benefit*: Writing off bad debts does not provide any tax benefit.

 2. *Tax Liability*: You may still be liable to pay tax on the written-off amount if it was previously claimed as income.

 Closing the Firm:

1. *Follow the Procedure*: Follow the procedure for closing a firm, including filing the necessary returns and obtaining the necessary approvals.

2. *Settle Outstanding Liabilities*: Settle all outstanding liabilities, including taxes, before closing

thank you foryour response 

sir wehave shown in previous year as advance given to parties  and not as income  so in this case even if i write off the amount i need to pay tax for the same 

Don't write it off. If you create a provision for it, it must be dealt with immediately by the end of year. So leave it and make that provision when your certain that your closing the firm. Check out if you get any tax benefit and write it off this year if you wish to.