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2015 (8) TMI 19 - HC - Income TaxPrincipal amount of loans waived off by the financial institutions / banks - whether do not represent the assessee's taxable income in terms of Section 41(1) r.w.s.28(iv) as the loans were taken for the purpose of acquisition of capital assets? - Held that:- Be that as it may, the loan being taken was undisputedly in the Capital field then its waiver should also be in the Capital field. The sine quo non for application of Section 41(1) of the Act is that a deduction must have been claimed by assessee in the Revenue field respect of the loan taken while arriving at it's profit in the earlier years so that a subsequent benefit of the same has to be taxed as income in the assessment year in which it is received. This admittedly is not the situation here. Moreover as held by this Court in Mahindra and Mahindra [2003 (1) TMI 71 - BOMBAY High Court ]that Section 28(iv) of the Act is applicable only on the receipt of any benefit or perquisite and would not apply to benefits obtained in cash or money. In this case also the waiver of loan is not a benefit or perquisite in kind but the right to recovery money of ₹ 79.81 lakhs is given up. Thus the issue stands concluded by the decision of this Court in Mahindra & Mahindra and the addition of Explanation 10 to Section 43 of the Act, does not in any manner impact the binding nature of this Court's order in Mahindra and Mahindra. Loan amount had been taken for the purchase of machinery / fixed assets being on capital account and not on trading account would not be hit by Section 41(1) r.w. section 28(iv) of the Act - Decided in favour of assessee.
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