Save Rs 588 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Should interest be recorded on loan which is non recoverable

Save Share

Join Us Follow Us Add as Source

This query is : Resolved

Report Follow Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

24 July 2012 Dear Friends,
Should interest be recorded on Loan which is Non recoverable..
The case stands as follows..
X (P) Ltd has given loan to D Textile Industries (Say Rs 1 Crore ) ..
D Textile industries has made a forgery and plundered many banks and other financial institutions and has run away..
Company has file a legal suit against D.

Now My Question is..

Do we have to book interest income on this loan provided ?
(Please suggest as per legal and income tax view)

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

24 July 2012 Since company has initiated legal suit, AND there is sufficient proof on record that D has already proved its malafied intentions of non payment, interest need not be recorded. If recorded, ITO has a VALID case of rejecting the claim.

Querist : Anonymous

Querist : Anonymous (Querist)

24 July 2012 ITO wont reject any such claim as i am increasing my income..
further can u plz provide with any case law..

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now