MAT on SEZ: A Red Flag for Investors

The Minimum Alternate Tax (MAT) was introduced in 1987 to bring companies that paid no corporate taxes or very little tax, after taking advantage of the exemptions provided by the Income-Tax Act, into the tax net.Under the Special Economic Zone (SEZ) Act, more>>

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Bad debts need not be proven to be irrecoverable. It is sufficient if they are written off in your Books of Account

M.George Korah FCA, DISA
Feb 23, 2010 Income Tax Case Laws In the case of TRF Limited vs. CIT , the Hon’ble Supreme Court had to consider whether, after the amendment to Section 36 (1) (vii) of the Income Tax Act, w.e.f. 1.4.1989, an assessee had to establish, as a matter of fact, that the debt advanced by the assessee had, in fact, become irrecoverable or whether writing off the debt as irrecoverable in the accounts was sufficient.
The Supreme Court decided as follows. The position in law is well-settled. After 1.4.1989, 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. When a 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.
Note: The judgements in Oman International Bank 313 ITR 128 (Bom), Morgan Securities 292 ITR 339 (Del) are impliedly approved. See Also: Kohli Brothers Color Lab (All)


Prosecution on failure of depositing tax: Case of Madhumilan Syntex

The prosecution of a company and its principal officers/directors for default in complying with regulations and their respective timelines has been envisaged in the Income-tax Act, 1961 (Act). However, recently there was an issue over the question that whether a mere delay in depositing tax would attract prosecution or not. Or could such proceedings be validly initiated only in cases where there has been an absolute failure in depositing tax. One can look for the answers in the long drawn-out case of Madhumilan Syntex, manufacturer and exporter of Soyabean Oil, a cooking medium used throughout the world. source: www.financialexpress.com