excess loan can be transfer to reserve?

This query is : Resolved

CA Dipak (Querist)
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22 January 2008 hi
x company took loan of 5 crores.after some period he paid 2 crores to bank.now he want to settlement with bank for remaining 3 crores rs.bank agree for a same.and 2 cr.Rs paid to bank as final amount of loan.
My quries is :
1.what will be entry in books of x company ?
whether outstanding 1 cr.transfer to reserve or it transfer to profit and loss a/c?
2.and what will tax effect of this.
whether it is addback and tax will cal.
on 1 cr. or not ?

3.what will be position in case of individual ?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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22 January 2008 The para 3 (iv)of AS-9 (applicable to listed companies, large commercial and industrial and business enterprise)clearly excludes the realised gains resulting from the discharge of an obligation at less than its carrying amount from the purview of "revenue".

Therefore the amount written-back shall be credited to capital reserve.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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27 February 2008 In the case of individual also the effect is same.

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