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2011 (2) TMI 12 - HC - Income TaxWaiver of loan and interest - one time settlement with the bank (OTS) - Deemed income u/s 41(1) - Held that: - Answer would depend upon the purpose for which the said loan was taken. If the loan was taken for acquiring the capital asset, waiver thereof would not amount to any income exigible to tax. On the other hand, if this loan was for trading purpose and was treated as such from the very beginning in the books of account, as per Sundaram Iyengar (T.V.) and Sons Ltd. (1996 -TMI - 5532 - SUPREME Court), the waiver thereof may result in the income moreso when it was transferred to Profit and Loss account. It is clearly admitted that the borrowed funds were not used for long term investment contrary to contention made in : submissions filed before me. All along it has been admitted by the appellant that borrowing was made for financing business. However, after the assessment order was passed & the AO added this amount treating it as part of circulating capital, the appellant has come up with the plea that the funds were borrowed for long term investment. This is nothing but change of stand. Income u/s 28(iv) - perquisites - a subsequent event has the effect of changing the nature and character of loan, a capital receipt into a trading receipt - Tribunal has reached a finding of fact that the amount of loan was not used in financing business. - Decided in favor of revenue
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