Trf Ltd vs Commnr. Of Income Tax

This position in law is well-settled. After 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee.

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However, in the present case, the Assessing Officer has not examined whether the debt has, in fact, been written off in accounts of the assessee. When bad debt occurs, the bad debt account is debited and the customer's account is credited, thus, closing the account of the customer. In the case of Companies, the provision is deducted from Sundry Debtors. As stated above, the Assessing Officer has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the Assessing Officer. Hence, the matter is remitted to the Assessing Officer for de novo consideration of the above-mentioned aspect only and that too only to the extent of the write off.

Subject to above, the civil appeals filed by the assessee are disposed of with no order as to costs.

......................J. [S.H. KAPADIA]

......................J. [AFTAB ALAM] New Delhi, February 09, 2010.

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5292 OF 2003

T.R.F. Limited ...Appellant(s)

Versus

Commissioner of Income Tax, Ranchi ...Respondent(s)

O R D E R

In view of our Order passed today in Civil Appeal No.5293 of 2003 and Civil Appeal No.5294 of 2003, we remit this case concerning Assessment Year 1994-1995 also to the Assessing Officer, who is directed to consider the question as to whether the write off is done by the assessee in its accounts in accordance with the law declared by us in the above order.

The civil appeal filed by the assessee, accordingly, stands disposed of with no order as to costs.

......................J. [S.H. KAPADIA]

......................J. [AFTAB ALAM] New Delhi, February 09, 2010.