I obtained a unsecured loan from from finance company,till date I have been showing it has liability,under scrutiny process assesse officer asked why I cannot issued cessation of liability since it is more than 5 years , so I asked the finance company to issue a confirmation letter showing that I am liable to them,but I came to know they have closed the account through cash deposits by themselves without my knowledge ,so they they did not gave me any confirmation, so I want to know whether I am responsible for the debt closure in my creditors account though I have not made any payment to them
Debt payment
Replies (1)
Needs to get confirmation from the finance company & if you are sure that you need not to make repayment of the loan to your creditor then you can project that as gain in your income statement
But from taxation point of view, whether it is taxable or not depends on the nature of the loan
if it is received for the purpose of long term requirement - then it will be capital receipt - not taxable
otherwise received for the purpose of working capital requirement - then it will be revenue receipt - taxable
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