Dismissing the appeal of the revenue the Court held that the surplus arising on prepayment of deferred sales tax loan at the net present value was a capital receipt which could not be termed a remission or cessation of a trading liability Followed CIT v. Sulzer India Ltd. [2014] 369 ITR 71 (Bom.)(HC) and CIT v. Bal Krishna Industries Ltd. [2018] 252 Taxman 375/300 CTR 209 (SC) ( AY.2004-05, 2005-06)
PCIT v. Mangalore Refinery and Petrochemicals Ltd. (2020)426 ITR 266/ 272 Taxman 441/191 DTR 47 / 316 CTR 842(Bom)(HC)
S. 41(1) : Profits chargeable to tax – Remission or cessation of trading liability -State Government scheme for deferment of sales tax and Treating amount as loan for specified period — Surplus on account of prepayment of loan —Amount not assessable as income [ S.4, 28(i) ]