TaxTMI 
TaxTMI 
2017 (8) TMI 1070
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....only argument was that this constitutes a trading liability. The provisions in question, Section 28(iv) and Section 41(1) clause (a) of the Income Tax Act, 1961 are attracted. 4 The Tribunal heard both sides extensively on this point and held as under: 13. In this context, we find that the assessee company had obtained the term loan from DEG, Germany in the course of the financial years 199495 and 199596. The term loan from DEG, Germany has been approved by the Reserve Bank of India vide a communication dated 05th June, 1995, a copy of which has been placed at pages 75 to 79 of the Paper Book. A perusal of the said RBI approval reveals that the assessee was permitted to raise foreign currency loan from DEG, Germany for financing the impor....
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....es to Spindle Fabrik Suessen, Germany, which was a liability outstanding against acquisition of fixed assets from the said concern. The Revenue contends that discharge of such liability of Spindle Fabrik Suessen, Germany cannot be treated as utilization of term loan from DEG, Germany for acquisition of fixed assets, because the assets already stood acquired prior to that date. So however, it is undisputable that the liability towards payment for acquisition of assets was outstanding and assessee has utilized the loan from DEG, Germany to payoff such liability. In our considered opinion, factually speaking, the payment made by the assessee to Spindle Fabrik Suessen, Germany towards outstanding liability against acquisition of fixed assets of....
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....hindra and Mahindra Ltd. (supra). Following the ratio of the Hon'ble Bombay High Court in the case of Mahindra and Mahindra Ltd. (supra), it has to be held that the waiver of the principal amount of loan granted by the DEG, Germany to the extent of Rs. 29,63,27,000/in terms of OTS Scheme is in the nature of capital receipt not chargeable to tax. 5 From a perusal of these factual findings, we find the same to be in consonance with the principle of law laid down by the Division Bench of this Court in the case of Mahendra & Mahendra Ltd. V/s. CIT, (2003) 261 ITR 501. 6 Mr. Walve appearing on behalf of the Revenue in support of the appeal, however, would urge that the Tribunal ignored the law laid down in another Judgment reported in Sol....