December 2022
Glimpses of Supreme Court Rulings
By Kishor Karia, Chartered Accountant
Atul Jasani, Advocate
Reading Time 16 mins
13. Pr. Commissioner of Income Tax vs. Khyati Realtors Pvt. Ltd.
(2022) 447 ITR 167 (SC)
Bad and doubtful debts – For claiming deduction of a bad debt - (i) The amount of any bad debt or part thereof has to be written-off as irrecoverable in the accounts of the Assessee for the previous year; (ii) Such bad debt or part of it written-off as irrecoverable in the accounts of the Assessee cannot include any provision for bad and doubtful debts made in the accounts of the Assessee; (iii) No deduction is allowable unless the debt or part of it ‘has been taken into account in computing the income of the Assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year’, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the Assessee; and (iv) The Assessee is obliged to prove to the AO that the case satisfies the ingredients of Sections 36(1)(vii) and 36(2) of the Act.The Assessee carried on real estate development business, trading in transferable development rights (TDR) and finance. In respect of its return of income for the A.Y. 2009-2010, the assessment was completed by the AO u/s 143(3) on 30th December, 2011. The Assessee, in the course of the assessment proceedings, contended that an amount of Rs. 10 crores was deposited with one M/s. C. Bhansali Developers Pvt. Ltd. towards acquisition of commercial p
