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2016 (4) TMI 756 - AT - Income TaxRevision u/s 263 - whether the ld. CIT is correct to hold that the bad debt written off should be taken as business income within the meaning of section 41(1) and section 28(iv) of the Act? - whether the bad debt written off representing remission in the principal amount is a capital receipt or not? - Held that:- The loan was taken for business purpose and not for the purpose of purchase of any capital asset. Therefore, the written off of balance principal and interest amount of loan in the accounts of Dr. MVS Murthy should be treated as income in the hands of the assessee within the meaning of section 28(iv) of the Act, since the loan was taken by the assessee for business purpose during the course of regular business operation. Further, the cessation of liability to repay the loan taken was not for the purpose of purchase of capital asset and therefore, the liability to repay the loan was taxable under section 41(1) in the hands of the assessee. In view of the above facts and circumstances of the case, we are of the opinion that the ld. CIT has rightly invoked the provisions of section 263 of the Act and directed the Assessing Officer to redo the assessment. Hence, we find no infirmity in the order passed by the ld. CIT and dismiss the grounds raised by the assessee. - Decided against assessee
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