waiver of loan cannot be taxed as “ book profit .”

Capital surplus on account of waiver of loan: The Mumbai Bench of the Income-tax Appellate Tribunal held that a capital surplus in respect of the waiver of loan amount cannot be regarded as amount available for distribution through the profit and loss account. A mere disclosure of an extraordinary item in the profit and loss account does not mean that the item represents the “working result” of the company. Accordingly, the waiver of the loan as a capital receipt cannot be taxed as “book profit.” The case is: JSW Steel Limited. Read a March 2017 report [PDF 352 KB] of KPMG