For claiming deduction of a bad debt under section 36(1)(vii), the essential condition is that the debt must be:

1. Section 36(1)(vii) requires the debt to be written off as irrecoverable in the books of account in the relevant previous year. 2. The debt must also have been taken into account in computing income (this year or earlier) or represent money lent in the ordinary course of banking or money-lending [section 36(2)]. 3. The assessee is NOT required to demonstrate that the debt has actually become bad — write-off suffices, so options B and D demand more than the law does. 4. Any subsequent recovery of the allowed amount is taxed under section 41(4). _Source: ICAI CA Inter P3(A) Income-tax SM (May 2026), Ch 3 Unit 3 PGBP, PDF p. 71_