CIT vs. Xylon Holdings Pvt. Ltd (Bombay High Court) |
The cessation of liability to repay the loan taken for purchase of a car is not assessable as income u/s 41(1) in accordance with Mahindra and Mahindra Ltd 261 ITR 501 (Bom). Though in Solid Containers Ltd 308 ITR 407 (Bom) it was held that waiver of a loan taken for trading activity would become the assessee’s income and be subject to tax even if the assessee had never claimed a deduction for the loan, that decision is not applicable because there the loan was taken for "trading purposes" and not for purchase of a capital asset. In the alternative, the waiver of a loan is not taxable u/s 28(iv) as that provision applies only when a benefit or perquiste is received in kind and not in cash. |
Monday 17 September 2012
S. 41(1): Cessation of liability to repay loan taken for capital purposes is not assessable as income
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