Bad debt allowability

It is not mandatory to file a suit against a debtor to show bad debts. Only the proof that the company has followed due procedure to recover the money from the debtors as any prudent company would do.

You may claim bad debts even by book adjustment also if it is supported by documents like sale invoice that u have earlier shown it as your income.

Agreed with Gagan & Mihir. S.C. also took the same stance in case of TRF Ltd. v/s CIT [2010]:-

"After 1-4-1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee."