TMI Blog2015 (4) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to make Section 41 (1) of the Act applicable. The amount which has been allowed in the earlier assessment years was only the variation on account of difference in rate of exchange. This the respondent is in any case offering for tax under Section 41 (1) of the Act. The principal amount of loan having been taken for purchase of capital amount was on capital account and therefore no occasion to apply Section 41 (1) of the Act in respect of that could arise. The issue in fact stands concluded in favour of the respondent by the decision of this Court in Mahindra and Mahindra Ltd (2003 (1) TMI 71 - BOMBAY High Court ) and M/s. Xylon Holding (2012 (9) TMI 449 - BOMBAY HIGH COURT) in the context of the submission made by the revenue before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the same was not offered for tax, as the loan was taken and utilized for purchase of machinery by its subsidiary M/s Dempo Mining Corporation. It was also contended that the loan was taken for capital purposes at a time when the Act did not apply to the State of Goa. This was not accepted by the the Assessing Officer on account of the fact that in the assessment year 1967- 1968, the liability on the loan was increased by ₹ 19.07 on account of variation in the Exchange rate and this was allowed as revenue expenditure. Thus by an order dated 28 February 1990 under section 143 (3) of the Act the Assessing Officer added the amount of ₹ 50.96 lakhs to the taxable income of the respondent. 4. Being aggrieved, the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above basis it is submitted that non obligation to return that loan would results in income to the respondent and stands covered by section 41(1) of the Act and is chargeable to tax. Thus, it is submitted that the substantial question of law as framed is to be answered in favour of the revenue by holding that the amount of ₹ 50.96 lakhs is revenue in nature and has to be a part of the respondent s total income. 8. Mr. M. Naniwadekar, learned counsel for the respondents submits that so far as the amounts attributed to the difference in exchange rate claimed in the earlier years and allowed as expenditure in the earlier years is being offered to tax by the respondent under Section 41(1) of the Act. So far as the loan being written of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f difference in rate of exchange. This the respondent is in any case offering for tax under Section 41 (1) of the Act. The principal amount of loan having been taken for purchase of capital amount was on capital account and therefore no occasion to apply Section 41 (1) of the Act in respect of that could arise. The issue in fact stands concluded in favour of the respondent by the decision of this Court in Mahindra and Mahindra Ltd (supra) and M/s. Xylon Holding (supra) in the context of the submission made by the revenue before us. It needs to be recorded that the Revenue has made no submission to establish that the amounts received as a loan by the respondent was not capital in nature. Thus the substantial question in principle has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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