Inter company loan bad debt

This query is : Resolved

mahim dangi (Querist)
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28 February 2014 Hello Experts,
Please Help me out Urgently.
One of the subsidiary company has taken loan from the parent company.Now the parent and subsidiary company both wants to write of the loan in their books of accounts.
What are the tax implications to be faced by the company?
Is it a capital receipt for the subsidiary company?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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28 February 2014 if the loan was given for non-working capital purposes, then it shall be considered as a capital transaction and accordingly, it shall be a capital receipt in the books of subsidiary and accordingly non-taxable.

refer Rollatainers ltd. V. CIT (2012) ( Delhi) and CIT vs Cochin Co. Pvt ltd (Kerala)].

in the books of the parent too it would not have any tax impact as such given that loans are never routed through tax p&l.

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