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TMI Blog2015 (4) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the ITAT was justified in law in holding that the nature of the amount of Rs. 50,96,000/- received by the assessee was capital in nature and not revenue? 3. For the assessment year 1987-1988, the respondent filed a return of income on 30/7/1987 declaring a total income of Rs. 50.02 lakhs. During the course of assessment proceedings, it was noticed that the respondent had shown Rs. 50.96 lakhs as an income in the profit and loss account. However, the same was not taken into account while computing its total taxable income as this was a loan taken of US # 7,00,000/- for M/s. Eisenberg Inc. Japan equivalent to Rs. 33.42 lakhs is not requried to be returned. The respondent contended that the same was not offered for tax, as the loan was ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was to be utilized by the respondent's subsidiary for purchase of machinery. Therefore the taking of loan to procure machinery was on capital account and cannot be considered as revenue. In the circumstances, the impugned order allowed the respondent's appeal and directed a deletion of Rs. 50.96 lakhs which was added to the respondent's income. 7. Ms. Asha Desai, learned counsel for the appellant in support of the appeal submits that whenever there was a variation in the liability arising on account of the loan taken in view of the difference in the rate of exchange, the same was allowed as revenue expenditure or added as income. It is on the above basis it is submitted that non obligation to return that loan would results i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputable position that the loan was taken by the respondent from M/s. Eisenberg Inc. Japan when the Act did not apply to the State of Goa. It is also not disputed that the loan was for purchase of machinery and that there was a cessation of liability to repay the amount. Section 41 (1) of the Act would have no application in the present facts. This is for the reason that it is not the case of revenue that the principal amount of loan received has been allowed as a revenue expenditure in the earlier years 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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