Why the Business Advances Should be allowed to written off ?

This is from BCAS referencer.....pl refer it for further details

If the assessee debits the P&L A/c and creates a provision for bad debts and also reduces the corresponding amount from the debtors account in the Balance Sheet, the provisions fo s. 36(1)(vii) are duly complied with -  (Vijaya Bank v. CIT – CA No. 3286/87 of 2010 dated 15.04.2010 – www.itatonline.org)

There is no requirement to prove that the debt has become bad. Mere writing off of te debt is sufficient for claiming the deduction – (TRF Ltd. v. CIT CA No. 5293 of 2003 dated 09.02.2010 – www.itatonline.org)

hey mayur

bad debt u/s 36 could be claimed only if amount has been previously considered in computing income under the head business or profession so in your case it is not possible to claim bad debt u/s 36 but in case if advance were made for revenue expenditure then assessee could claim loss u.s 28 as trading losses.. otherwise not possible