CA PARTH SHAH (In Practice) (1951 Points)
24 September 2015An assessee writes off unsecured loan from his books and increase profit. Will it lead to contravention of of section 269T? Is it a risky i.e can it invoke scrutiny ?
Miss Rinkal
(Student)
(1309 Points)
Replied 28 October 2015
You mean they treated it as income. Am I right?
If yes then there is no contravention to sec 269T. 269T applies when repayment of loan is made otherwise than by an account payee cheque or bank draft or through electronic means of banking channels. Here in the present case, there is no repayment only. Instead what was a loan given is now treated as an income and not as due to the creditor anymore.
Kindly note that this loan income will be chargeable as income from other sources and not as business income. It means if you have shown it in p&l, then it is to reduced from your p&l to arrive at business income and would be separately disclosed in income from other sources.
Miss Rinkal
(Student)
(1309 Points)
Replied 28 October 2015
No scrutiny cannot take place merely due to this reason. Even if scrutiny takes place for that ay then you will be having a loan confirmation letter declaring the said loan is foregone. That would not lead to any penal provisions also.
Miss Rinkal
(Student)
(1309 Points)
Replied 28 October 2015
@ efiler:
Are you reasoning to my post then this is the answer to your question
No this will not be revenue to the dept but will be income deemed to be earned by the person.
Think from the angle of an individual only. Mr A avails loan from Mr B. Mr B forego the loan due to any reason. Mr A got that money free of cost which means he has earned a kind of income only. Hence that income is brought to tax.
rahul
(Student)
(36 Points)
Replied 31 October 2015
if any person repay the loan amount with interest didnt exceed 20000 (with cash or cheque) there is no violation but repay the loan amount exceed 20000 by mode cash, u/s 269t penalty equal to the loan repaid. if mode of payment is a/c payee cheque/demand draft/ECS through bank, no penalty under section271E
rahul
(Student)
(36 Points)
Replied 31 October 2015
if any person repay the loan amount with interest didnt exceed 20000 (with cash or cheque) there is no violation but repay the loan amount exceed 20000 by mode cash, u/s 269t penalty equal to the loan repaid. if mode of payment is a/c payee cheque/demand draft/ECS through bank, no penalty under section271E
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