Written of bad debts

Tax queries 217 views 2 replies

Hi,

We paid advance to the vendor for receipt of services the services not yet received. However, he become a bankrupt. The amount whatever we have paid, we are going to write off in the books of account as a bad debts. 

Please clarify whether same shall be allowed as bad debts in the Income Tax computation for Previous Year, if yes, kindly quote the section and relevant rules.

 

Thank you

Replies (2)
As per Sec.37(vii), Bad debts will be allowed as an expense, however provision on Bad Debts will be disallowed.
Here bad debts will be allowed but not as per sec 36 but as per sec 37


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