The Income Tax Appellate Tribunal, Ahmedabad bench in the case Integra Engineering India Ltd Versus Asstt. Commissioner of Income-tax observed and has held while deleting the addition that any adjustments for the bad and the doubtful debts amounts to actual writing off the bad debts.
The bench comprising of Judicial Member, T.R. Senthil Kumar and the Accountant Member, Waseem Ahmed in the case observed and has held that the assessee in the case cannot denied the benefit for the bad debts which being merely on the reasoning that such bad debts were not being claimed in the profit and loss account but are adjusted against the provision for the bad debts.
In the present case, the appellant or the assessee who being in the business of manufacturing and selling textile machinery, spares, and job work. Therefore, the assessee in the year under consideration has written off the bad debts for an amount of Rs. 36,75,000 in the profit and loss account.
The court in the case also observed that the assessee has also written off the bad debts amounting to Rs. 69,33,446 in the computation of income wherein it adjusted the provision for the bad debts created in the earlier year. Therefore, it has also been claimed by the assessee a deduction for an amount of Rs. 1,06,00,000 on account of bad debts. Thus, the Assessing Officer in the case observed and has disallowed the same on the reasoning that the assessee has not placed on record the efforts which are made by it for the recovery of the alleged bad debts. The Assessing Officer in the case observed and has disallowed the same and added it to the total income of the assessee.
It has also been contended by the assessee in the case that the adjustment of bad debts against the provision represents writing off the bad debts. Thus, it has been concluded by the CIT (A) that the bad debts were not actually written off.
Accordingly, the tribunal observed and has held that any adjustment which is made by the assessee on account of the bad debts and is against the provisions created in the earlier year which amounted to actual writing off of the bad debts in the books of accounts.
The counsel, Yogesh Shah appeared for the appellant.
The counsel, Sudhendu Das represented the respondent.