Loan Written Off
This query is : Resolved
11 October 2019
A private limited company is engaged in finance activities. It provides loans to other companies. Out of this a loan is irrecoverable and the company wishes to write off that loan thru Profit & Loss Account. Is the loan as such written off an allowable expenditure?
Soumitra Basu
(Expert)
12 October 2019
yes it will be treated as bad debt
Darshan Jain
(Expert)
15 October 2019
Pl clarify whether lending is really the principal object of the company under consideration?
If you could prove the business nexus of lending only then alone can you claim it as bad debts under section. 36(1)(vii)
If you could prove the business nexus of lending only then alone can you claim it as bad debts under section. 36(1)(vii)
18 October 2019
Thanks for the advices. But if lending comes in ancillary objects, then?
Darshan Jain
(Expert)
18 October 2019
Loans extended without direct business nexus are not allowable as bad debts. The write-off would be disallowed.
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