Mr. X is assigning the right to receive amounts (i.e. Receivables) from his Trade Debtors to Mr. Y for a flat sum of 25 Lacs. Debtors Book value is Rs 3 Crores. Now the loss resulting from this transaction, Is this Loss a Business Loss or Capital Loss. Please Explain.

 its a business loss

rest unrealised amount is bad debts

Hi Santhosh,

The loss is business loss and can be allowed as Bad debt u/s 36. The company has to write off the amount as bad debt in its books of account.