Dismissing the appeal the Court held that the loan utilised by the assessee was for the capital purposes and the loan was given by the National Dairy Development Board. The assessee continued to remain liable to repay those amounts. The State instead of fully writing off the amounts had imposed a condition that they would be utilised only for capital or rehabilitation purposes. This was therefore a significant factor, i. e., the writing off was conditional upon use of the amount in the hands of the assessee which was for the purpose of capital. ( AY.2004-05)
PCIT v .Rajasthan Co-Operative Dairy Federation Ltd. (2020)423 ITR 89 (Raj) (HC)
S. 41(1) : Profits chargeable to tax – Remission or cessation of trading liability – Commission claimed as expenditure – Write off of loan- cannot be treated as revenue receipts .