Tuesday, March 15, 2011

WAIVER OF LOAN IS INCOME OR NOT DEPENDS ON WHETHER LOAN WAS USED FOR CAPITAL OR REVENUE PURPOSES

The waiver of a loan is taxable as income or not depends on the purpose for which the loan was taken. If the loan was taken for acquiring a capital asset, the waiver thereof would not amount to any income eligible to tax u/s 28(iv) or 41(1). On the other hand, if the loan was taken for a trading purpose and was treated as such from the very beginning in the books of account, its waiver would
result in income.

0 comments:

Post a comment