02 January 2010
Xyz Private limited Company engage in the Retail Business has incurred losses for last three years. It has taken loan from ABC which is now no longer payable. Hence, assessee wants to write off the same in the books of accounts by mutual understanding. One opinion is to treat the same as Income from other sources and set off current year business losses with the same. Other opinion is since; the same is not routed through P & L, then even the lender will not be allowed the same as expenditure. Then how will it be treated as income to the loanee? Hence can the same be shown as income in books and in income tax no income should be shown and carry forward the losses as it is. Please give your views.
Since you have receivied a money three years back which is no longer payable, It will assume it as a transfer and thus will be taxed in current year...
CAclubindia
