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Liability writtenoff

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(Querist)
21 March 2012 In the Books there is a Bank O\D of Rs 3 Crore. Now the party is not able to pay off its debts & he settles it by paying Rs 1 Crore. what will be the treatment as per Income Tax act in the books of the party ?
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
21 March 2012 If the O/D amount is used for the day to day business operations ( and not for capital assets),waived amount is taxable under section 41(1) of the income tax Act,1961.

Citation :- Rollatainers Ltd Vs. CIT (2011) 339 ITR 54(Del).
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