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Sunday 4 November 2012

Cessation of liability to repay loan for capital asset is capital receipt


Section 41(1) of the Income -tax Act, 1961 - Remission or cessation of trading liability - Repayment of loan - Assessment year 2004-05 - Whether cessation of liability to repay a loan taken to purchase a capital asset does not result in a revenue receipt and it is not taxable under section 41(1) - Held, yes [Para 8 & 9] [In favour of assessee]
Section 28(iv) of the Income-tax Act, 1961 - Business income - Value of benefit arising from exercise of business or profession - Whether cessation of liability to repay a loan taken to purchase a capital asset does not result in a revenue receipt and it is not taxable under section 28(iv) - Held, yes [Para 8 & 9] [In favour of assessee]
[2012] 26 taxmann.com 333 (Bombay)
HIGH COURT OF BOMBAY
Commissioner of Income-tax-3
v.
Xylon Holdings (P.) Ltd.*
S.J. VAZIFDAR AND M.S. SANKLECHA, JJ.
IT APPEAL NO. 3704 OF 2010
SEPTEMBER 13, 2012

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