waiver of unsecured loan

should unsecured loan waived be treated as revenue receipt in the hands of the debtor or written of as capital receipt.
Replies (1)

1. In the case of The commissioner Vs Mahindra and Mahindra (SC) has ruled waiving of loan would not tantamount to any type of monetary benefit to the assessee hence it cannot be taxed as perquisite or as a cessation of a trading liability u/s 41(1).
2. For anything to be considered as perquisite the same should be capable of converting into monetary terms. Here waiving of loan can never be converted into any monetary terms and hence it cannot be taxed under the head perquisite. 
3. With respect to cessation of trading liability is concerned with charging of expenses (typically cost of RM) and later on waiving of such liability in the hands of the company. Only this type of transaction is covered u/s 41(1) and this also cannot be equated for waiving of loan and subsequently it cannot be taxed too. 
4. Hence based on the SC ruling waiving of loan cannot be treated as income and hence tax liability will not arise on the same. 
Please correct me if the interpretation has an alternative view. 

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