Government loan converted into equity and post-amalgamation fund recognition, with mixed rulings on deductions, set-off, and capital expenses.

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....Conversion of Government loan liability and accrued interest into equity by allotment of shares was held not to constitute remission or cessation of liability, so no deemed income arose under s.41(1)(a); deletion of the addition was sustained in favour of the assessee. Contributions to a provident/pension fund could not be disallowed as to an unapproved fund once statutory recognition was granted post-amalgamation, since recognition was held to relate back to the effective amalgamation date; relief was granted to the assessee. Provision for insurance fund/no-fault liability was allowable only to the extent of actual payments pursuant to statutory liability or court orders; the revenue succeeded. Set-off under s.72A was allowed as the amalga.........