Writting off of unsecured loan

Tax planning 1034 views 1 replies

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


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 14 March 2026
Article Trainee

N N V Satish&co

Hyderabad

CA Inter

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 14 March 2026
Associate CA

N N V Satish&co

Hyderabad

CA

View Details
Company
Featured 19 March 2026
Article Assistant

Gupta Sachdeva & Co. Chartered Accountants

New Delhi

CA Final

View Details
Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details