query reg creditors !

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Gourav Kapoor (Querist)
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25 June 2009 suppose you have a creditor for rs. 10000 and suddenly your creditor send u a notice that his firm has been dissolved and we are not required to pay him further remaining amount...

now clarify me that how ill u treat that rs. 10000 in your books
is it an income for us ?
if yes, will it is taxable under income tax act ?

Balakrishnan

Balakrishnan (Expert)
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25 June 2009 Yes since it is a revenue receipt, it has to be credited to P&L a/c and eventually also taxed in the year you received the intimation

Vipul J. Bhavsar

Vipul J. Bhavsar (Expert)
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25 June 2009 I dont agree with Mr. Balakrishnan.
As you are not required to pay anything to the Creditor, the amount Rs.10,000 will be treated as capital receipt and will not be charged to tax.
Waiver by creditor is not your income.

I request experts to put their opinion on this and keep the question open till consensus arrives.

Gourav Kapoor

Gourav Kapoor (Querist)
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25 June 2009 mr. balakrishanan

if it is so then please tell the section uder which it is applicable for tax ?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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19 July 2025 Aspect Treatment
Accounting ₹10,000 credited to P&L as income
Income Tax Taxable as business income under Section 41(1)
Year of Taxability Year in which waiver/intimation is received (i.e., firm’s dissolution notice)

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