Section 36(1)(vii) of the Income-tax Act, 1961—Bad debt— It is not necessary to establish that debt has become irrecoverable and accounting entry for write off is sufficient to claim the deduction for bad debts.

Facts: Assessee's appeal is against the action of CIT(A) upholding the disallowance of bad debts written off of Rs. 40,78,373/-

Held, that it was noted that assessee has fulfilled the two conditions for claiming the debts written off during the year under consideration as bad debt under section 36(1)(vii) i.e. the amount was shown as income in earlier years and the amount has been written off in the accounts for the year under consideration. Hence, assessee would be entitled to deduction of the impugned dad debt written off during the year under consideration. Further, we note that the issue as to whether the assessee is required to justify the writing off the debts in the books of accounts as bad in the year has now been settled and decided by the decision of the Supreme Court in the case of TRF Ltd. v. CIT [2010] 190 Taxman 391/323 ITR 397 wherein it has been held that it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable and the accounting entry for write off is sufficient to claim the deduction for bad debts. Therefore, in the light of the facts and the law and the Hon'ble Supreme Court decision in TRF Ltd. (supra), we are of the considered opinion that the claim of bad debt actually written off in the books of the assessee should be allowed as deduction and, therefore, we allow the appeal of the assessee. - VANTAGE ADVERTISING (P.) LTD. V/s DY. CIT - [2020] 182 ITD 039 (ITAT-KOLKATA)