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2015 (4) TMI 1109 - BOMBAY HIGH COURTAdditions u/s 41(1) - Amounts received as a loan - loan was written off by the lender - Nature of receipt - revenue or capital receipt - Held that:- The loan was taken by the respondent from M/s. Eisenberg Inc. Japan when the Act did not apply to the State of Goa. It is also not disputed that the loan was for purchase of machinery and that there was a cessation of liability to repay the amount. Section 41 (1) of the Act would have no application in the present facts. This is for the reason that it is not the case of revenue that the principal amount of loan received has been allowed as a revenue expenditure in the earlier years so as to make Section 41 (1) of the Act applicable. The amount which has been allowed in the earlier assessment years was only the variation on account of difference in rate of exchange. This the respondent is in any case offering for tax under Section 41 (1) of the Act. The principal amount of loan having been taken for purchase of capital amount was on capital account and therefore no occasion to apply Section 41 (1) of the Act in respect of that could arise. The issue in fact stands concluded in favour of the respondent by the decision of this Court in Mahindra and Mahindra Ltd (2003 (1) TMI 71 - BOMBAY High Court ) and M/s. Xylon Holding (2012 (9) TMI 449 - BOMBAY HIGH COURT) in the context of the submission made by the revenue before us. It needs to be recorded that the Revenue has made no submission to establish that the amounts received as a loan by the respondent was not capital in nature. - Decided in favour of assessee
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