Cessation of loan liability taken for purchase of capital assets is capital receipt

Brief of the case In the case of The Commissioner of Income Tax vs. V. S. Dempo & Company Ltd, Goa High Court has held that the principal amount of loan taken for purchase of capital assets was on capital account and therefore on cessation of its repayment there is no occasion to apply Section 41 (1) of the Act. And resultant income should only be treated as capital receipt. Facts of the case 1. For the assessment year 1987-1988, the respondent filed a return of income on 30/7/1987 declaring a total income of Rs.50.02 lakhs. During the course of assessment proceedings, it was noticed that...