Cessation of liability

151 views 1 replies
User Avatar

53 Points Joined April 2016
creditors written off covered under the 41(1)(a) or 41(1)(b)

Please guide me with the explanation.
0 Reply Share Follow
On 29 August 2024 at 12:44 Report
Replies (1)
User Avatar

Master in Accounts & high court Advocate
9596 Points Joined December 2011

Section 41 of the Income-tax Act, 1961 deals with the treatment of creditors written off. Here's a brief explanation: 41(1)(a): - Applies to creditors written off as irrecoverable. - Amount written off is allowed as a deduction from business income. - This provision covers cases where the debt becomes bad and is written off as a loss. 41(1)(b): - Applies to creditors written off due to remission or waiver. - Amount written off is treated as income and taxed accordingly. - This provision covers cases where the creditor voluntarily waives or remits the debt. Key differences: - 41(1)(a) deals with bad debts written off as irrecoverable. - 41(1)(b) deals with debts written off due to remission or waiver. To determine which provision applies, consider the reason for writing off the creditor: - If it's due to irrecoverability, use 41(1)(a). - If it's due to remission or waiver, use 41(1)(b).

Reply
On 30 August 2024 at 13:30

Summarize this with AI
ChatGPT Perplexity Claude Google AI Grok

CCI Pro

Leave a Reply

Post Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Threads

More recent discussions | Post

Related Threads
Loading