Unsecured loan has been recovered where it will effect.

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Ashim kr Ray (Querist)
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25 June 2018 Sir,

Sir, mother has recovered unsecured loan from his son, so the recovery amount along with interest will be effect whether on capital Account or Balance Sheet .Please advise.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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26 June 2018 If the above loan was given for personal use, then no question of bad debts arised at the time when it was not recoverable.It was directly debited to the Capital Account. If this is the situaiton; then now Credit the recovered amount to the Capital.

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CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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26 June 2018 Recovered interest would be taxable and amount of loan (if it was claimed as bad debts earlier), would be taxed in the hands of mother.

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Ashim kr Ray

Ashim kr Ray (Querist)
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26 June 2018 Sir,
That means sir whole amount of loan along with Interest which has been acquired from son have to be credited in capital account of mother.

Ashim kr Ray

Ashim kr Ray (Querist)
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26 June 2018 And loan has not claim as bad debt and its for son's shop development purpose.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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26 June 2018 Then only interest portion is taxable in the hands of the mother

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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26 June 2018 Since the loan was not claimed as bad debts earlier, hence the amount which is shown as outstanding Loans, the same would be set off from the amount received. No effect on capital.

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