Dismissing the appeal of the revenue the Court held that the amount of Rs. 8,07,35,116 credited to the capital reserve by the assessee pertained to the principal borrowed without there being any component of interest embedded therein. The waiver of the principal amount of loan by IDBI amounting to Rs. 8,07,35,116 under the one-time settlement scheme did not constitute a trading receipt, as it was never claimed by the assessee as deduction in the past.( AY.2009-10)
PCIT v. Gujarat State Financial Corporation (2020) 426 ITR 47 / ( 2021 ) 277 Taxman 99 (Guj)(HC).Editorial : SLP of revenue dismissed , PCIT v. Gujarat State Financial Corporation ( 2021 ) 280 Taxman 234 / 126 Taxmann.com 154 (SC)
S. 41(1) : Profits chargeable to tax – Remission or cessation of trading liability -Waiver of loan — Neither the component of interest embedded therein nor the amount claimed as deduction earlier —Not assessable as business income