Write off of loan given by a company
This query is : Resolved
01 June 2012
ABC company has given an inter corporate deposit (ICD) to XYZ company for business purposes. Later the amount could not be refunded by XYZ company and hence the same was written off by ABC company. Now, is this loan amount, which is written off, taxable in the hands of XYZ company. If yes under what head and under what section of Income Tax Act. Does it make any difference if the ICD is taken for acquiring a capital asset.
Kindly clarify
Kindly clarify
01 June 2012
The write off of loan is NOT taxable. Section 41(1) deals with taxability of of such cases.
However, Section 41(1) applies to an expenditure or TRADING LIABILITY which was claimed as decution and is later on recovered or written off.
Deposit received from ABC is NOT a traidng liability in the books of XYZ. Accordingly, Section 41(1) is NOT attracted and there is no taxability.
However, Section 41(1) applies to an expenditure or TRADING LIABILITY which was claimed as decution and is later on recovered or written off.
Deposit received from ABC is NOT a traidng liability in the books of XYZ. Accordingly, Section 41(1) is NOT attracted and there is no taxability.
01 June 2012
Thanks.
When the accounts of XYZ company are finalized the loan written off by the lender has to be taken to the credit of P&L account, which increases the book profits which will be subject to MAT. Am I right?
When the accounts of XYZ company are finalized the loan written off by the lender has to be taken to the credit of P&L account, which increases the book profits which will be subject to MAT. Am I right?
01 June 2012
Take it to capital reserve.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Itr 1 processing
- Off Market debit and credit transaction
- Showing Gift from relative in ITR for this year
- Reporting Income under Section 44ADA
- Share accounting-->fifo - capital gain - period as per fifo?
- ITR selection for salaries and capital gain less than L
- ITR 1: Details for showing Exempt Income
- ITR returnFY25-26
- INCOME TAX ON REDEVELOPEMENT OF FLAT
- Short Term Capital gain on shares bought and sold after 2018 onwards
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
