Is bad debts allowable in income tax

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Accounts exe
267 Points Posted on 05 August 2014

Dear All,

Pleae let me know is bad debts allowable expenses as per income tax.

We have raised a invoice in year 2011-12 for the amount 5 lac towards event managemnet service & till now we did not recived amount now we want to write off that amount . 

Please help me 

 

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On 05 August 2014 at 10:29 Report
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student
25 Points Posted on 05 August 2014
     

Yes, it is an allowable expense u/s 36(1)(vii)..

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On 05 August 2014 at 10:54
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CA final CS executive (from Bangalore)
2018 Points Posted on 05 August 2014
Yes. . . . . . . . . . . . . .
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On 05 August 2014 at 11:02
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Accounts exe
267 Points Posted on 05 August 2014

Thanks but my ca is saying that it will not be allowed sad  ...  there is any cas law so that i can show him 

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On 05 August 2014 at 11:04
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xyz
169 Points Posted on 05 August 2014
it can be allowed provided in any previous year it is recorded in income i.e sales have been recognised. and it should be written of as irrecoverable in the books. bab debts can be claim in year of write off. it should not be a provision ..only actual bad debt....assesse need not have to prove the irrecoverablity the fact that it have been wriiten off in books ..make eligiblity for bad debts deduction...so no case law available...case laws are availavle for revovery of babd debts...for its taxablity
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On 05 August 2014 at 11:28
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CA final CS executive (from Bangalore)
2018 Points Posted on 05 August 2014
Type that section in google. U get many cases. Its allowable.
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On 05 August 2014 at 11:31
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Accounts exe
267 Points Posted on 05 August 2014

Thanks to all ...  but please let me knot how to convience my ca

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On 05 August 2014 at 11:53
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CA final CS executive (from Bangalore)
2018 Points Posted on 05 August 2014
Show some recent case law. Or if u have any tax book u only show dis section. .
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On 05 August 2014 at 12:05
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CA final CS executive (from Bangalore)
2018 Points Posted on 05 August 2014
When provisions itself and also many court cases saying its allowable then question him on what basis u r saying its nt allowable..etc.
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On 05 August 2014 at 12:21
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CA final CS executive (from Bangalore)
2018 Points Posted on 05 August 2014
cases : TRF ltd vs CIT, General insurance corp of India. And to claim it as allowable, certain conditions shud satisfy. Viz., debt must be incidental to the business, it shud be revenue in nature, it must have been taken into a/c in computing income in the year 2011-12, must have been written off in the buks of a/c in current year. In ur case, all r satisfied so no doubt its allowable.
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On 05 August 2014 at 13:13
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Chartered Accountant
202 Points Posted on 05 August 2014

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On 05 August 2014 at 16:21
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Accounts exe
267 Points Posted on 05 August 2014

Thanku very much all of you :)

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On 05 August 2014 at 16:29
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tax officer
25 Points Posted on 05 August 2014
there is no need to follow any case law...sec 36(1)(via) is sufficient to deal with the present situation...if u fulfill 2 conditions of sec36(1)(vii) then u can deduction In respect of bad debt...
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On 05 August 2014 at 19:21
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student
28 Points Posted on 05 August 2014
Y u need to convince ur ca ??? Afterall he is a qualified ca .just ask him the reason for not allowing it
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On 05 August 2014 at 23:20
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manager
22 Points Posted on 06 August 2014
To claim bad debts all the formalities to be follow to recover the amount and proper record should be maintain.
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On 06 August 2014 at 06:49

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