02 June 2017
Sir,in my books of accounts a loan of Rs 15 lakh is outstanding since 2011-12 and hence it became time barred.I want transfer this loan account into my profit and loss account as INDIRECT INCOME and i have other sales also. so then after calculate normal business profit and pay tax as PGBP with benefit of tax slab rate..Is it allow to do so as per tax and as per normal practice??
As per section 41(1) when there is liability which is cancelled i.e not to be paid should be treated as income and taxed as business income, Liability cancelled is time barred or not that does'nt matter.
Since you itself treat same as you income and paying tax on same so there is no problem.
CAclubindia
