Nitin Sharma (Graduate) (44 Points)
06 August 2015Hi,
I have query regarding ECB. ECB is unpaid in books for over 10 years. The company in discussion with the party decided to pay back 30% of the amount. My query is regarding treatment of the balance 70% in books and its tax implications.
Thank You.
Hitesh Khanna
(Accounting & Finance Taxation Company Law Audit )
(839 Points)
Replied 06 August 2015
ECB ie External Commercial Borrowing.
Principal Amount borrowed in Neither an Income nor an Expense.
Amount when borrowed is a Liability in the hands of the borowwer , Hence Loan w/off should be a Capital receipt.
Tax Treatment: 70% Not Taxable being a Capital receipt
30% of Principal Amount paid by the company : Not an Expense.
Kinldy Rectify If i have said anything wrong. The above Answer is my Opinion on the Question placed in the forum. Expert opinion should be taken and tallied with.
CAclubindia
