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Treatment of bank o/d final settlement

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(Querist)
21 March 2012 A person is having a liability of Rs. 3 Crores in Bank o/d in his books.The bank declared the same as a Non Performing Asset in its own book & agreed at a final settlement by clearing off the debt at a repayment of Rs. 1 Crore.
What should be the accounting treatment in the books of the person & what should be the income tax obligation regarding the difference of Rs. 2 Crores ??????
Please try to clarify the said doubt with the help of necessary accounting entries.
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
21 March 2012 Rs. 2 Crore is taxable u/s 41(1) vide Delhi High court decision reported in (2011) 339 ITR 54 (Del).
Entry:-

Bank O/D Dr 3 crores
To Deemed income 2 crores
" Cash 1 crore
(Being closure of o/d as per
one time settlement)
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o.velavan

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o.velavan (Expert)
21 March 2012 I agreed with the view of Sri.B.Chackrapani Warrier as the od is used for running of busiess not for acquiring any capital asset.
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