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Waiver of working capital loan by bank
hello friends !!
can any one tell me what will be the treatment of waiver of working capital loan by bank to assessee??
e.g assessee had taken loan of rs. 5,00,000/- frm xxx bank .. than after three years bank waive loan of rs. 3,00,000/- n 1,00,000/- of intest.
what will b tax libility?
Replies (6)
Both the prinicpal and interest are treated as revenue receipts .. both are taxable
Dear pawan, can u please refer section under which I can study tax treatment?
Sec 41 (1) cessation of trading liability
Can we interpreat working capital loan as trading liability?
Is there any exact defination of trading liability?
Working capital loan is mentioned as an example of trading liability under sec 41(1). Loan amount trested as taxable, but interstate is not taxable as it is not yet allowed as deduction under section 43 B.
Interst not interstate...
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