2012 (2) TMI 523 - HC - Income Tax

Business income under Section 28(iv) - Held that - The Tribunal has recorded a finding to the effect that the holding Company had initially advanced funds to the assessee in 1998 as share application money. This was later on transferred as an unsecured loan. The Tribunal has held that the loan availed of for acquiring a capital asset (shares) was waived and cannot be treated as assessable income for invoking the provisions of Section 28. The original receipt being of a capital nature its waiver did not have the quality of changing its character into a revenue receipt. No substantial question of law would arise. The appeal is accordingly dismissed.

Summary

The Bombay High Court dismissed the Revenue's appeal under Section 260A of the Income Tax Act, 1961 for Assessment Year 2003-04. The Tribunal ruled that a waived loan used to acquire shares is not assessable income under Section 28(iv) of the Income Tax Act.