Not necessary for the assessee to establish that the debts written off as bad debt have in fact become bad and irrecoverable

Last updated: 13 October 2020

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The Income Tax Appellate Tribunal has ruled that individuals claiming deductions for bad debts written off do not need to prove that these debts have become definitively bad and irrecoverable. This decision relates to an appeal concerning the assessment year 2014-15, where the revenue authorities had rejected the assessee's claim for a deduction of Rs. 88,59,511 on account of bad debts.

Court :
ITAT Bangalore

Brief :
This appeal by the assessee is directed against the order of CIT(Appeals)-7, Bengaluru dated 20.09.2018 in relation to assessment year 2014-15.

Citation :
ITA No.3239/Bang/2018

IN THE INCOME TAX APPELLATE TRIBUNAL
“C” BENCH : BANGALORE
BEFORE SHRI N V VASUDEVAN, VICE PRESIDENT
AND SHRI B R BASKARAN, ACCOUNTANT MEMBER

ITA No.3239/Bang/2018
Assessment year: 2014-15

Joseph Davaraj Koilpillai,No.225, Holywood Town,Sadahalli Post,Bangalore – 562 127.PAN: AARPJ 0519L
APPELLANT

Vs.

The Income Tax Officer,Ward 6(3)(4),Bangalore.
RESPONDENT

Appellant by : Shri V. Srinivasan, Advocate
Revenue by : Smt. R. Premi, Jt. CIT(DR)(ITAT), Bengaluru.

Date of hearing : 06.10.2020
Date of Pronouncement : 09.10.2020

O R D E R

Per N.V. Vasudevan, Vice President

This appeal by the assessee is directed against the order of CIT(Appeals)-7, Bengaluru dated 20.09.2018 in relation to assessment year 2014-15.

2. The only issue that arises for consideration in this appeal by the assessee is as to, whether the revenue authorities were justified in rejecting the claim of assessee for deduction of a sum of Rs.88,59,511 on account of bad debts written off.

3. The assessee is an individual carrying on business of project management and consultancy services under the name and style ‘Elhanan Management Services’. For the AY 2014-15, the assessee filed return of income declaring total income of Rs.4,07,450.

To know more in details find the attachment file

FAQ :

No, according to this ruling, you are not required to establish that debts written off as bad have in fact become bad and irrecoverable to claim a deduction.

The appeal concerned whether tax authorities were justified in rejecting the assessee's claim for a deduction of Rs. 88,59,511 for bad debts written off.

This ruling specifically relates to the assessment year 2014-15.

The ruling was made by the Income Tax Appellate Tribunal (ITAT), 'C' Bench, Bangalore.