ITAT Allows Deduction of Bad Debts, Holding Write-Off in Books as Sufficient Compliance u/s 36(1)(vii)

In a recent ruling, ITAT allowed a deduction for bad debts under Section 36(1)(vii), ruling that merely writing off the debt in the books of accounts is sufficient compliance. The tribunal clarified that businesses are not required to prove the irrecoverability of the debt, provided they have written it off as a bad debt in their financial records. This decision underscores the principle that once a business records a debt as irrecoverable, it can claim deductions without further justification.