Assessee received Rs 10 crores as Advance from ILC for supply of iron Ore. Assessee paid Rs 5.60 crores to its suppliers and should ILC as creditor for Rs 4.17 crores. ILC refused to take delivery. ILC wrote off advanced paid to Assessee as bad debts. Assessing Officer treated Rs 4.17 crores as income of Assessee u/s. 41(1). The tribunal held that the amount of Rs. 10 crores had been received by the assessee for business purposes, i.e., for supply of iron ore fines by the assessee and for purchase of iron ore from ILC by the assessee. When the money was received by the assessee in the course of carrying on of business, even if it was treated as a loan at the time of receipt, it was in the nature of revenue, and on the waiver it became the assessee’s own money, though it was not taken into the profit and loss account. The money had been received in the course of day to day affairs of the assessee. There was no purchase of any capital asset. The loans received by the assessee from ILC were for circulating capital and not for fixed capital. Since the advance was taken in the course of normal business affairs of the assessee and it was unclaimed amount and not required to be returned by the assessee it would be its trade receipts. Though the amount received originally was not of income nature, the amount remained with the assessee for a long period unclaimed by ILC and became a definite trade surplus and was to be treated as taxable income. The amount changed its character when the amount became the assessee’s own money because of having been written off by ILC in its books of account and there was no contractual obligation on the part of the assessee to perform its obligation and it should be treated as income of the assessee. The amount of Rs. 4,17,71,395 was income of the assessee under section 41 of the Act. (AY. 2011-12).