A company has written back liabilities in the current year relating to purchase of
fixed assets(Capital creditors) made in the financial year 2008.
The company has taken no due certificate from the capital creditors and treated
the liability as other income by crediting p and l account.
My question is does the company need to pay tax on the remission of liability on
capital account as per the income tax act.Sec 41 refers only to remission of
trading liability.
In my opinion the company need not pay tax on the remission of capital
liability.The amount is very material.it is 4 crores
Please advice me asap.
CAclubindia
