Mahindra - Waiver of loan

Loan waiver by a foreign lender.

Whether waiver of principal amount of loan is taxable as business income under Section 28(iv) or as remission under Section 41(1)?

Section 28(iv) applies only to benefits in kind, not cash/loan waiver. Section 41(1) applies only where the loan was claimed as deduction earlier. Where neither condition is met, the waiver is a capital receipt.

Loan waiver is taxable only when explicit statutory conditions are satisfied.