Bad loan - no hope of recovery. how to book loss?
This query is : Resolved
Kapil Khanna
(Querist)
27 July 2011
In Yr 2000 I gave loan of 1 lac to an individual X and earned a good rate of interest. Interest was paid regularly per month upto May 2005 after which X defaulted on all interest payments.
In 2007 X was found to be absconding and I have not received interest since then. Many investors have collectively filed police complaint and fraud case.
After waiting another few years, we dont have hope of recovering the loan capital of 1 lac.
How do I go about booking this capital loss? It can be setoff against which types of capital gain i.e. Property, Shares, Proprietorship Business etc.
Please advise.
In 2007 X was found to be absconding and I have not received interest since then. Many investors have collectively filed police complaint and fraud case.
After waiting another few years, we dont have hope of recovering the loan capital of 1 lac.
How do I go about booking this capital loss? It can be setoff against which types of capital gain i.e. Property, Shares, Proprietorship Business etc.
Please advise.
CA PARAS BAFNA
(Expert)
27 July 2011
In case money lending is your main business
then only you can claim bad debts under the head of IFBP.
It can not be set off against any income under other heads. It is a capital loss and it is to be debited to capital account.
then only you can claim bad debts under the head of IFBP.
It can not be set off against any income under other heads. It is a capital loss and it is to be debited to capital account.
Kapil Khanna
(Querist)
27 July 2011
What is IFBP? I tried searching on google but did not get any useful results.
Please help.
Please help.
CA PARAS BAFNA
(Expert)
27 July 2011
IFBP= INCOME FROM BUSINESS & PROFESSION.
ACTUALLY I WOULD HAVE WRITTEN AS=PGBP
PROFITS & GAINS OF BUSINESS OR PROFESSION.
ACTUALLY I WOULD HAVE WRITTEN AS=PGBP
PROFITS & GAINS OF BUSINESS OR PROFESSION.
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