https://www.taxtmi.com/article/detailed?id=187 Waiver of a loan principal is a capital receipt and not taxable where the principal was never claimed as an allowable deduction; Section 41(1) applies only if an expenditure or trading liability was claimed and allowed in earlier years and later remitted. Waived interest is taxable only to the extent it had been previously allowed against taxable income; interest that was not claimed or was disallowed earlier does not become taxable on waiver. Accounting practice recommends crediting principal waivers to capital reserves and segregating waived interest relating to earlier years into a reserve rather than profit and loss. en-us Mon, 06 Oct 2008 00:00:00 +0530 Mon, 06 Oct 2008 11:42:42 +0530 TaxTMI RSS Generator https://www.taxtmi.com/article/detailed?id=187 Waiver of a loan principal is a capital receipt and not taxable where the principal was never claimed as an allowable deduction; Section 41(1) applies only if an expenditure or trading liability was claimed and allowed in earlier years and later remitted. Waived interest is taxable only to the extent it had been previously allowed against taxable income; interest that was not claimed or was disallowed earlier does not become taxable on waiver. Accounting practice recommends crediting principal waivers to capital reserves and segregating waived interest relating to earlier years into a reserve rather than profit and loss. Articles Income Tax Mon, 06 Oct 2008 00:00:00 +0530 https://www.taxtmi.com/article/detailed?id=187