Suppose if ABC Ltd has taken loan from Bank of Rs 10 Lake of which 7 lakes has repaid along with interest. Due to Some dispute between ABC Ltd and Bank, ABC Ltd refused to repay balance amount. Hence Bank has filed case against ABC Ltd for non repayment of debt in which court judgement come in favour of ABC Ltd.
Now Books of Accounts of ABC Ltd shows debt of Rs 3 Lake (i.e. 10-7)
So what is the Accounting treatment of above transaction?
And what is the tax treatment?
Whether ABC Ltd has to pay tax on 3 lake?
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