Taxability of Income received from bank

[satbir singhwahi]

Can Amount received on one time settlement with bank , be taxed as income .

[Rama Krishana]

All depend upon the nature of transaction, the issue behind the settlement. Whether the issue related to revenue transaction or capital transaction. For more details, you may refer to the following case law: 2008 TMI - 30879 - HIGH COURT DELHI

[DEV KUMAR KOTHARI]

Your query is not clear. Amount received on one time settlement with bank - in OTS bank receives money and not the customer. I believe you are seeking clarity in case of bank and not customer of bank. Interest recovered in OTS , if not taken as taxable income will be taxable on receipt. Amount recovered on a/c of principal will not be taxable, unless it was allowed as bad debt/ loss earlier.

AI Summary

Taxability of one-time bank settlement depends on revenue or capital character; interest recovered taxable on receipt. Taxability of amounts received under a one time bank settlement depends on whether the transaction is revenue or capital. Recovered interest is taxable on receipt; recovered principal is not taxable unless it was earlier allowed as a bad debt or loss, in which case the recovery becomes taxable. Determination requires factual analysis of the character of the settled claim.