Interest free loan

[b shah]

can interest free loan be added u/s 56[2][v] ? as any sum recd?

AI Summary

Interest-Free Loans Not Considered Income Under Section 56(2)(v) of Income Tax Act; Ensure Documentation for Clarity. A query was raised regarding whether an interest-free loan could be considered income under Section 56(2)(v) of the Income Tax Act. The response clarified that a loan, whether with or without interest, is not income because it involves a promise of repayment, thus constituting consideration. Loans are classified as capital receipts, which are not taxable under the Income Tax Act. It was advised to document the loan with a promissory note, bill of exchange, or post-dated cheque to ensure clarity and avoid any tax implications.