Writting off of unsecured loan

Dear All,

Our Parent company had given unsecured loan to his 11 subsidiary companies of Rs. 110 crores.

Now we decide that we will write off theses loans in the books of Subsidiaries Company and offer as an income and also in the books of parent company we will take the benefit of as an allowable expenditure.

Please suggest me on the following points:-

1. Is A.O. treat the expenditure booked in the books of parent company as a capital expenditure and disallows the same?

2. Can Subsidiary companies will take again unsecured loans in future form the parent company?

3. Is there any other way to write off the loans in the books of subsidiary companies?

4. If the other way is possible then what is the impact on the parent company?

 

Please help me with the above points with any relevant Case laws, if possible.

 

Regards

Jitendra Jhanwar

Replies (1)

Jitendra.( in your case) loan allowed to subsidiaries will be covered under section 2 (22) e. that is Deemed Dividend. However it is not correct to show the loan as bad in books of both the companies.

AO will definately catch you on this matter.

Yes . the company can, but , it will sublect to section stated.

You may square up the loan. once it disappears from the balance sheet, the Ao will not be able to verify it easily.

You can square up the loan by money or money's worth.

You may adjust, the share holding pattern in such a way, that 2(22)e will not be applied

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 07 July 2026
Articleship

Jawahar and Associates Chartered Accountants

Hyderabad

CA Inter

View Details
Company
ARTICLESHIP 11 July 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
20 July 2026
Senior GST Executive

Chandak Agarwal & Co

Mumbai

Graduate (Any)

View Details
Company
21 July 2026
Chartered Accountant

Keshri & Associates

Thiruvananthapuram

CA

View Details
Company
ARTICLESHIP 15 July 2026
CA Articles

Kinjal H Shah & Co.

Mumbai

CA Foundation

View Details
Company
06 July 2026
Senior Accountant

Arvindkumar Maniar & Co.

Rajkot

CA

View Details
Company
ARTICLESHIP 23 July 2026
Article

Gianender & Associates

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 17 July 2026
Article Assistant and B.com pass

BANSAL YOGESH AND CO

Gautam Budh Nagar

B.Com

View Details