Mat applicable on written back of unsecured loan

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rahul (Querist)

11 April 2013 xyz pvt ltd is in processes of closing there business and removal of their name from ROC. Balance sheet prepared for 31.03.2013 company has written back unsecured loan taken from directors in p & l account. I have read case law on the basis of that come to conclusion that unsecured loan is not taxable as per income tax act.my question is whether it is covered in MAT as book profit is 16 lakhs which is nothing but unsecured loan written back. plz suggest me any case law or section regarding whether MAT is applicable or not ??

Thanx

CA Krunal

CA Krunal (Expert)

11 April 2013 I presume the non-taxability of unsecured loan would be on account of "capital receipt" and not "revenue receipt"

Similar treatment you can make in P&L as well you can create direct credit to Reserve & Surplus. As per Income tax law ITO can not challenge audited books of accounts

rahul

rahul (Querist)

12 April 2013 Thank you very much sir.

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