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Facts
The assessee, engaged in manufacturing automobile parts, wrote off bad debts amounting to ₹2,74,02,549/- during the assessment year 2022-23. The Assessing Officer (AO) made an addition to the income, disallowing the write-off on the grounds that the evidence was insufficient and conditions of Section 36(1)(vii) and 36(2) of the Act were not met.
Held
The Tribunal held that the mere writing off of debts as bad in the books of account is sufficient for claiming deduction under Section 36(1)(vii) of the Act. The assessee had adequately provided evidence to the AO and CIT(A). The Tribunal referred to the Supreme Court's decision in T.R.F. Ltd. vs. Commissioner of Income-tax and CBDT Circular No. 12/2016, which clarified that proving recovery status is not mandatory.
Key Issues
Whether the write-off of bad debts by the assessee is admissible for deduction under the Income Tax Act, 1961.
Sections Cited
36(1)(vii), 36(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 25.08.2025 for the AY 2022-23.
The only issue raised by the assessee is against the order of ld. CIT (A) confirming the addition of ₹2,74,02,549/- as made by the ld. AO on account of debts written off by the assessee during the year.
The facts in brief are that the assessee filed the return of income on 04.11.2022, declaring total loss of ₹4,21,394/- which was revised subsequently on 28.12.2022, declaring the same loss. The assessee is engaged in the business of fabrics and manufacturing of
In the appellate proceedings, the ld. CIT (A) simply affirmed the order of the ld. Assessing Officer
After hearing the rival contentions and perusing the materials available on record, we find that during the year the assessee has written off ₹2,74,02,549/- as per the details below:-
Sl. Particulars Address PAN Amount (in Year in which No. Rs.) income was recorded 1. Heavy Engineering Plant Plaza Road PO-Dhurwa AAACH4534P 2,72,11,712 F.Y. 2010-11 to Corporation Limited Ranchi-834004 F.Y. 2013-14 2. Tata Steel Limited General Office Near PO AAACT2803M 34,307 Bistupur Jamshedpur-831001 3. TRF Limited !6F6+4CP, Burma Mines, AAACT6352M 90,530 F.Y. 2017-18, Jamshedpur Bagbera Colony, F.Y. 2018-19, & Jharkhand-831007 Prior to F.Y. 2017-18 4. Invasive Protective B-41 Phase-II, Industrial Area, AAACI3896F 66,000 Security Adityapur Jamshedpur- 832109 Total 2,74,02,549
5.1. We also note that the assessee has booked the sale corresponding to these debts in the earlier assessment years and “4. In view of the above, claim for any debt or part thereof in any previous year, shall be admissible under Section 36(1)(vii) of the Act, if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfills the conditions stipulated in sub section(2) of sub-section 36(2) of the Act.”
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26.02.a2026.