Setting off of ICD against business income

We are in Tea business. 4 years back, we had provided ICD to one Company in the similar business and would receive interest. Subsequently we bought Tea Garden of that borrower Company but they stopped repayments of inter Corporate deposit/ loan. Can we set off outstanding ICD against own business income. We are unlike NBFC and not generally give ICD to other Corporate. 

Kindly advise with case laws,AS. TAX Tribunal judgment,  if possible. 

 

Thanks in advsnce

Replies (2)
Quick Summary
A tea business is seeking advice on whether they can offset an outstanding Inter Corporate Deposit (ICD) against their business income. The ICD was provided to a company from which they later purchased a tea garden, but the borrower subsequently defaulted on repayments. The user is asking for guidance on accounting standards, specifically Indian Accounting Standards (Ind AS), and any relevant case law or Tax Tribunal judgments to support offsetting the ICD against their own business income, noting their business is not primarily lending.

As per Indian Accounting Standards (Ind AS), the provision for setting off of loans, including ICDs, needs a clear matching principle under the revenue-expense alignment in the business income context. Since your primary business is not lending, setting off the ICD directly may not align with revenue recognition and matching principles in Ind AS.

Many thanks.

Is there any case law, accounting guideline from icai.

 

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