Loan Written Off

This query is : Resolved 

11 October 2019 A private limited company is engaged in finance activities. It provides loans to other companies. Out of this a loan is irrecoverable and the company wishes to write off that loan thru Profit & Loss Account. Is the loan as such written off an allowable expenditure?

12 October 2019 yes it will be treated as bad debt

15 October 2019 Pl clarify whether lending is really the principal object of the company under consideration?

If you could prove the business nexus of lending only then alone can you claim it as bad debts under section. 36(1)(vii)


18 October 2019 Thanks for the advices. But if lending comes in ancillary objects, then?

18 October 2019 Loans extended without direct business nexus are not allowable as bad debts. The write-off would be disallowed.



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