Applicability of Sec.56

[Ethirajan Parthasarathy]

A Company pays a lesser amount towards Bank loan under one Time settlement arrangement.

There are lot of decisions to say that amounts waived off by the bank cannot be brought to Income tax under section 41(1) of Income Tax Act.

These decision pertain to period before introduction of Section 56(2)(viia).

My Query is whether such loans waived off will be treated as Income under section 56(2)(viia) or 56(2)(x) in the hands of the company.

[DR.MARIAPPAN GOVINDARAJAN]

In my view it will not be treated as income. Views of Experts are solicited in this regard.

AI Summary

Taxability of debt waivers: whether bank forgiven loan amounts constitute income under later income provisions remains contested. Whether a company's reduced payment under a one time bank settlement, producing a waiver of the remaining loan, is taxable is contested: prior decisions before the later statutory provision treated such bank waived amounts as non taxable, but the query asks whether the later income from other sources provision or an alternative clause now captures such waivers.