State with brief reasons whether the following losses sustained during the year while carrying a business be allowable while computing the income under the head "Profits and gains of business or profession": Loss due to

Losses / Bad debts which are directly incidental to the business or profession of the assessee are allowable as per provisions contained under section 36/37 of the Income Tax Act 1961. Further as per the provision of section 37 of the Income Tax Act, Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". Accordingly allowability of the given losses is as under: Loss due to Non-Recovery of Advances given for supplies: Bad debts relating to business are allowed as deduction provided the debt has been considered as Income in the books of the accounts. In case of bad debt on account of advances, the advance amount for supplies per se is not treated as Income and therefore such bad debt will not be allowed as deduction. However, the same may be allowed as deduction under section 37 if the conditions of section 37 has been complied i.e. Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession".