Written of Deposit of Director in Private Limited Company

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This query is : Resolved

Girish Limbachiya (Querist)

02 January 2026 Dear Sir,

We have one Private Limited Company. Once the Director is also a shareholder in the company and has 50% shares in the company. The director has given a loan to the company for business. The same loan has been reported in DTP-3 with ROC and in the Financials of the company, which disclosed with Income tax . The amount is around 1.50 crore.

Now the company is not in position to repay it and want to write of this amount in company's financial.
so My questions are :
1. What would be tax treatment in company . If this will treated under other income , and company have profit .... this profit can adjust against past carried forward loss ?
2. Director can claim it as business loss or capital loss in his personal tax return ?
3. If Director having other income during the years ....the business loss or capital Investment loss can be adjust again other income ? and can save tax ?

Request you please advise in this matter .

Best Regards
Girish Limbachiya

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

02 January 2026 Write-off / waiver of a director’s loan of ₹1.50 crore by a private limited company does not create taxable income for the company, provided the loan was capital in nature and never claimed as an expense. The amount should be credited to capital reserve, not P&L, and therefore cannot be adjusted against carried-forward losses. In the hands of the director, the loss is not allowable as business loss or capital loss and cannot be set off against any other income.

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