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2013 (7) TMI 777 - HC - Income TaxApplication of Section 41(1) - Interest free unsecured loan from Government - Tribunal deleted addition on account of capital receipt - Held that:- no claim of loss expenditure of trade liability was made by the assessee in respect of the loan granted by the State Government. Therefore, question of considering the said loan cannot be considered as revenue receipt - the conversion of the loan given by the State Government into non refundable interest free unsecured loan was on capital account - when the loan was granted, it was of capital account. By converting it into non refundable interest free unsecured loan, it remain part of the capital account as appears from the balance-sheet of the assessee. The assessee has merely changed the description of the loan as per the direction of the State Government and no way it has treated it as a revenue receipt in its books of account - present case is regarding the conversion of the capital of one amount to another amount. So, conversion cannot be taxed, only when specifically provided in a book of statute, but there is no provision in the Act that on conversion of one capital from another capital will be treated as revenue receipt - Decided against Revenue.
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