Unsecured loans written back

This query is : Resolved

CA Namrata Shetty (Querist)
Follow

02 January 2010 Xyz Private limited Company engage in the Retail Business has incurred losses for last three years. It has taken loan from ABC which is now no longer payable. Hence, assessee wants to write off the same in the books of accounts by mutual understanding. One opinion is to treat the same as Income from other sources and set off current year business losses with the same. Other opinion is since; the same is not routed through P & L, then even the lender will not be allowed the same as expenditure. Then how will it be treated as income to the loanee? Hence can the same be shown as income in books and in income tax no income should be shown and carry forward the losses as it is. Please give your views.

Pawan Periwal

Pawan Periwal (Expert)
Follow

02 January 2010 Just to clear your doubt..

Forget you company is in loss..

Since you have receivied a money three years back which is no longer payable, It will assume it as a transfer and thus will be taxed in current year...