Provision for bad debts — allowability u/s 36(1)(vii)

Circular No. 772/1999 — Provision for bad debts — allowability u/s 36(1)(vii)

Date: 1998-12-23 Status: ACTIVE Category: Business Income / Deductions Binding on Department: Yes (Section 119 / Section 400 IT Act 2025)

Summary

For claiming bad debts deduction, writing off in books is sufficient — assessee not required to prove irrecoverability (post TRF Ltd SC judgment).

Key Directions

1. Writing off bad debt in books is sufficient — no need to prove irrecoverability.
2. Provision for doubtful debts not deductible — only actual write-off.
3. Rural branch advances of banks: provision allowable under section 36(1)(viia).

Applicability Under IT Act 2025

Saving Clause: Section 536 of IT Act 2025 saves circulars issued under the 1961 Act “so far as not inconsistent” with the new Act.

Old Section (1961 Act)	New Section (2025 Act)	Consistent?
36(1)(vii)	35	Yes

Cross-References

Act Sections

• Section 36(1)(vii)
• Section 35

Related Circulars

• None identified

Key Case Law (Circular Supremacy)

• To be populated — cases where this circular was cited/applied

Full Text

Full text to be added — see raw/circulars/ for PDF when available

Source

• Official: incometaxindia.gov.in/circulars