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TMI BlogIncome Tax on Waiver of LoanX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Sir / Madam, In January 2005, I was running an Ancillary Unit performing tube cutting and semi processing operations on behalf of M/S Gabriel India Ltd. I had asked for a loan and the same was disbursed to me on 28/1/2005, at a 4% per annum monthly reducing balance, recoverable in 120 monthly installments [10 years]. The Mulund plant of Gabriel India Ltd declared a lockout and since we we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re an ancillary unit supplying cut tubes, we also closed the unit. Gabriel India Ltd. had recovered a principle amount of Rs. 1,91,659 out Rs. 10 lakhs [loan]. The balance loan of Rs. 8,08,341 was waived off by the Chairman in view of my Father's and my self's long services rendered to the Gabriel Group. This was in May2007. While filing Income Tax Return for the Assessment year 2008-2009, on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e advice of my chartered Accountant, the loan which was waived off was considered in my Indirect Income and a Tax of nearly Rs 1,18,000 was paid by me on the waived loan amount of Rs. 8,08,341. A few days back, while going through the book "Tax free Incomes and Investments" by R N Lakhotia, page 176, I came across Tax on "Waiver of Loans". He has mentioned that if a normal creditor waives any no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n trading loan, then the amount of waiver of the loan is not treated as taxable income of the debtor or borrower. Q. Can you please clarify the meaning of non trading loan and also if there exists any possibility of Income Tax Refund in my case and How to go about it? Regard's. - Reply By CA GOPALJI AGRAWAL - The Reply = It is too late to take corrective action. Of course, if the loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was provided for working capital, it would be taxable and if was provided for taking plant etc, it would not be taxable. You can go through the judgment by clicking the following link: Rollatainers Ltd. Versus Commissioner of Income-tax ( 2011 (8) TMI 447 - DELHI HIGH COURT ) - Income Tax on Waiver of Loan - Query Started By: - Neeloy Kumar Bakshi Dated:- 16-5-2013 Income Tax - Got 1 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eply - Income Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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