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2017 (11) TMI 368 - ITAT MUMBAIAddition u/s.41(1) - waiver of loan as taxable u/s.41(1) - in the nature of trading transaction or not - Held that:- Secured loan obtained from the bank is not obtained during the course of trading transaction and hence neither the provisions of Section 41(l) of the Act nor the rule of law laid down in the decisions relied upon by AO can be invoked to treat that as income within the meaning of Section 41(1) of the Act. Accordingly, AO is directed to delete the addition so made u/s.41(1). Appeal for the A.Y.2000-01 is allowed. Addition in respect of waiver of loan on settlement with the bank by invoking the provisions of Section 41(1) read with Section 28(iv) - A.Y.2001-02 - Held that:- It is clear from the records placed before us that the total dues payable by the Bank consisted of principal component and interest component. The principal Component being a loan in respect of which no deduction, benefit or loss was either claimed or allowed, was transferred to Capital Reserve Account and interest component was duly credited to the Profit and Loss Account and also offered to tax as income within the meaning of Section 41(1) of the Act. The loan received is a capital receipt and it does not lose its capital nature even when it is renounced or waived by the lender. - There is no merit for treating the waiver of loan as taxable u/s.41(1) of the IT Act. - Decided in favor of assessee.
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