Borrowed funds excluded from capital base for section 80J relief under rule 19A, following Supreme Court precedent.

Borrowed moneys taken from financial institutions, banks and unsecured lenders were not includible in the capital computation base for relief under section 80J read with rule 19A. The Bombay HC applied the Supreme Court ruling in Lohia Machines Ltd. v. Union of India, which settled that borrowed funds fall outside the relevant capital base for this computation. The includibility of the borrowed sums was therefore answered against the assessee and in favour of the Revenue.

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Issues: Whether borrowed moneys taken from financial institutions, banks and unsecured lenders were includible in the capital computation base for relief under section 80J read with rule 19A.

Analysis: The questions relating to inclusion of borrowed amounts in the capital base were governed by the Supreme Court decision in Lohia Machines Ltd. v. Union of India, which settled that such borrowed funds were not includible for computation under the relevant provision and rule.

Conclusion: The question of includibility of the borrowed sums was answered in the negative and against the assessee, in favour of the Revenue.

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