COMMISSIONER OF INCOME TAX Vs. SAWHNEY EXPORTS

JUDGEMENT

(1.) THE short question raised in this appeal filed by revenue is as to whether the Income -tax Appellate Tribunal (in short as 'Tribunal') was right in deleting the addition of Rs. 31,62,238 made by the AO with regard to the deduction claimed by assessee for bad debts under s. 36(1)(vii) of the IT Act, 1961 (hereinafter referred to as 'Act').

(2.) THE assessee is engaged in the business of exports of garments and the payments were being received in foreign exchange. For asst. yr. 1997 -98, assessee filed return claiming bad debts amounting to Rs. 1,25,36,852. The RBI had allowed permission in respect of sum of Rs. 90,36,518 to be written off in the books of account. In respect 0 balance amount of Rs. 31,62,238, the AO denied the benefit of writing off the bad debts since assessee has not furnished any evidence to this effect.

(3.) IN appeal filed by the assessee, the CIT(A) held that amount of Rs. 31,62,238 has been written off during the year and the same should be allowed as deduction, even though the approval from the RBI has been received subsequent, and the AO has himself allowed the claim for the balance amount, even though approval has been received after the close of the previous year. It was further held that the approval from RBI is not mandatory condition for writing off, under the provisions of the Act and as such addition of Rs. 31,62,238 was deleted. the appeal filed by the Revenue.