diversion of funds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 May 2011 a company has given loans to a person in crores and the person has donated the money to a trust,.The company and the trust are related parties.Is there any tax angle involves in it ,,,or is this not diversion of funds

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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14 May 2011 BOTH ARE SEPARATE ENTITIES
IT IS NOT DIVERSION OF FUNDS
THE CO WOLUD BE A CREDITOR SO FAR AS THE OTHER PERSON IS CONCERNED OR OTHER PERSON WLD BE A DEBTOR
BUT THE PROBLEM MAY ARISE WHEN THE CO WLD WRITE OFF THE LOAN MONEY
BUT IN THAT CASE ALSO THE PERSON CONCERNED WILL ESCAPE SECTION 41(1)
CO WILL NOT BE ABLE TO GET DEDUCTION FOR BAD DEBT
CA MANOJ GUPTA
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