Waiver of principal amount of working capital loan not a capital receipt; Amount waived off taxable as deemed business profit u/s 41(1)

ROLLATAINERS LTD. Vs. COMMISSIONER OF INCOME TAX (DELHI HIGH COURT) The assessee, Rollatainers Ltd was declared as a sick company by Board for Industrial Financial Reconstruction (BIFR) due to poor financial position and erosion of entire net worth. Pursuant to Restructuring Package as approved by Corporate Restructuring Cell, the bank waived off the interest and principal amount of working capital loan granted in the form of ‘Cash Credit’ to the assessee. The assessee treated the waiver of principal amount of loan as capital receipt and hence argued that the same was not taxable. ...