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Waiver of loan is taxable u/s 28(iv) : Madras HC
Case Law Details
- Case Name
- CIT Vs Ramaniyam Homes (P.) Ltd. (Madras High Court)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2006-07
- Courts
- All High Courts, Madras High Court
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CA Deepak Goel
Waiver of loan – Madras HC has reignited this issue. Held that Waiver of loan is taxable under section (‘u/s’) 28(iv)
Brief
Under one time settlement the bank waived loan amount (used by the assessee for acquiring capital assets) which includes both principal amount of loan and interest on loan. Held that Waiver of loan is taxable under section (‘u/s’) 28(iv) of the Income-tax Act, 1961 (‘the Act’). The waiver of a portion of the loan would certainly tantamount to the value of a benefit. This benefit may not arise from “the business” of...
Can anybody further throw light on the following para narrated by the Madras High Court while giving decision regarding Chargeability of waived loan as taxable :
” two entries are made in the books of account, one in the profit and loss account where payments are entered – ; and
“Alternatively, the amount representing the waived portion of the loan is shown as a capital receipt in the profit and loss account its”