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Please Help: income tax

Posted Date : 17-Nov-2018 , 09:40:44 pm | Posted By: Manoj Jain

Category : Income Tax | Answers : 0| Comments : 1| Hits: 114

I hv one query that one prop. Is having two firms A & B , A firm having Rs.30lakhs creditors of firm B and in firm B having same debtors Rs.30Lakhs in the name of A. In firm B there is no operation since last 4-5years. But firm A is having running business till date. Now prop has decided to write off sundry creditor firm B through capital account in firm A. Can it be done, if yes then, is it taxable or not , pls explain with any case ref...thanx in advance for valuable suggestion..

Comments
Posted By : Amit 23-Nov-2018, 06:59:25
Yes....it can be written off and without any tax effect. As you mentioned there is no transactions in Firm B,,,,but there are debtors in firm B, it means there would have been some sale from Firm B to Firm A, 4 or 5 years back and that sale would have been taken in the ITR of the same proprietor in that particular year....now as the same person is given and receiver in this particular case,,he can write off these debtors in Firm B and close the Firm B without any tax effect. Same would not have been the case in any other entity i.e. partnership firm or Company with same management. Thx.
 

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