Steelco Gujarat Ltd., Ahmedabad V. The ACIT., Circle-8, Ahmedabad

ITA 1050/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7790 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 01-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV AGARWAL
• Assessee Lawyers: M M SHAHAR
• Keywords: Depreciation; Business expenditure; Cost of acquisition

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, A - BENCH, AHMEDABAD . BEFORE : SHRI T.K.SHARMA, JUDICIAL MEMBER , AND SHRI D.C.AG RAWAL , ACCOU NTANT MEMBER. ITA NO. 1 0 50/AHD/2006 (ASSESSMENT YEAR 2002 - 03) STEELCO GUJARAT LTD., 1 ST FLOOR, H.K.HOUSE, ASHRAM ROAD, A HMEDABAD. VERSUS ACIT, CIRCLE 8, AHMEDABAD (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI M.M.SHAH,AR FOR THE RESPONDENT SHRI RAJEEV AGARWAL, DR ORDER SHRI T.K.SHARMA, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER FILED BY THE ASSESSEE RAISING THE FOLLOWING GROUNDS OF APPEAL. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) WAS NOT JUSTIFIED IN LAW AND ON FACTS OF THE CASE IN TREATING THE WAIVER OF OUTSTANDING PRINCIPAL AMOUNT OF LOAN OF RS.86,02,061 BY WIPRO FINANCE LTD., AS SUBSIDY, GRANT OR REIMBURSEMENT TOWARDS COST OF THE FIXED ASSETS AS ENVISAGED UNDER SECTION 43 EXPLANATION 10 OF THE INCOME - TAX ACT,1961 AND CONFIRMING DISALLOWANCE OF DEPRECIATION OF RS.21,50,515 . 2. THE MAIN ISSUE INVOLVED IN THIS APPEAL IS THAT THE ASSESSING OFFICER REDUCED AND THE LEARNED CIT(A) HAS CONFIRMED THE AMOUNT OF LOAN WAIVED BY M/S. WIPRO FINANCE LTD FROM THE ACTUAL COST OF PLANT AND MACHINERY FOR THE PURPOSE OF CALCULATING DEPRECIATION. 3. THE FACTS OF THE CASE AR E THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE PRODUCTION AND SALES OF COLD ROLLED STEEL COILS/SHEETS AND GALVANIZED COILS/SHEETS HAVING ITS PLANT AT GIDC, PALEJ. THE RETURN OF INCOME WAS FILED DECLARING A TOTAL LOSS OF RS.14,71,77,158 FOR THE ASSESSMENT YEAR 2002 - 03. IN THE STATEMENT OF TOTAL INCOME FORMING PART OF THE SAID RETURN, A NOTE WAS APPENDED THAT IT HAS WRITTEN BACK THE AMOUNT OF LOAN OF RS.86,02,261 BEING WAIVER OF PRINCIPAL AMOUNT OF LOAN TAKEN FROM WIPRO FINANCE LTD. THE ASSESSEE ENTERED INT O AN AGREEMENT WITH WIPRO FINANCE LTD FOR A LOAN OF RS.3 CRORES. IT WS CLAIMED BEFORE ASSESSING OFFICER THAT THE LOAN WAS FOR THE PURPOSE OF WORKING CAPITAL. FOR OBTAINING THE LOAN MACHINERIES WERE PLEDGED AS SECURITY AND HYPOTHECATED ITA NO. 105 0/AHD/2006 2 TO WIPRO FINANCE LTD . AFTER DEDUCTING THE DOCUMENTARY CHARGES, BANK CHARGES ETC ASSESSEE RECEIVED RS.70 LAKHS ON 19.9.97 AND 2,16,60,676 ON 12.9.1997. THUS, IT RECEIVED A TOTAL AMOUNT OF RS.2,86,60,676 . SUBSEQUENTLY DUE TO HEAVY LOSS ES SUFFERED BY THE ASSESSEE , IT WAS A DECLA RED AS SICK COMPANY BY THE BOARD OF INDUSTRIAL FINANCE AND RECONSTRUCTION. IT APPROACHED WIPRO FINANCE LTD AND OTHER FINANCIAL INSTITUTIONS LIKE IDBI, IFCI, ICICI AND NATIONALIZED BANKS FOR ARRIVING AT ONE TIME SETTLEMENT OF PRINCIPAL AMOUNT OF LOAN AND I NTEREST THEREON. IN RESPONSE TO THIS REQUEST AN AGREEMENT DT.31.3.2000 WAS ENTERED WITH WIPRO FINANCE LTD., TO SETTLE THE DUES AT RS.1,87,50,000 AS AGAINST THE OUTSTANDING DUES OF RS.2,73,52,061 STANDING IN THE BOOKS. THUS IT RESULTED INTO WAIVER OF AMOUNT OF R S.86,02,061. OTHER FINANCIAL INSTITUTIONS ALSO HAVE SIMILARLY WAIVED DUES . THE ASSESSING OFFICER, HOWEVER, INFERRED THAT WHAT THE ASSESSEE COMPANY HAS RECEIVED , TANTAMOUNT TO SUBSIDY GRANT, REIMBURSEMENT (WHATEVER NAME IT CALLED, WHICH INCLUDES WAIVE R OF INTEREST /TAX/PRINCIPAL ETC. THEREAFTER , HE CONCLUDED THAT COST OF VARIOUS ASSETS ACQUIRED BY THE ASSESSEE IS THUS MET DIRECTLY OR INDIRECTLY BY WIPRO FINANCE LTD AS THE ASSESSEE HAS RECEIVED WAIVER OF AN AMOUNT OF R S.86,02,061. THE SAID LOAN WAS USED F OR THE PURCHASE OF MACHINERY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1998 - 99. ASSESSEE DID NOT CLAIM ANY DEPRECIATION ON THE MACHINERY , IN EARLIER YEARS BUT IT STARTED CLAIMING DEPRECIATION FROM THE CURRENT YEAR I.E., 2002 - 03 , I.E., IT WAS THE FIRST YEAR, WHEN THE ASSESSEE CLAIMED DEPRECIATION ON THE SAID MACHINERY WHOSE COST OF ACQUISITION WAS INFERRED AS REDUCED BY WAY OF WAIVER OF RS.86,02,061. THE LEARNED ASSESSING OFFICER THEN INVOKED EXPLANATION 10 OF SECTI ON 43 ACCORDING TO WHICH GRANT O R WAIVER ETC., RECEIVED BY THE ASSESSEE WAS NOT TO BE INCLUDED IN THE ACTUAL COST OF THE ASSET. ACCORDINGLY , THE ASSESSING OFFICER DISALLOWED 25% OF THE DEPRECIATION ON RS.86,02,061 BY REDUCING THIS AMOUNT FROM THE COST OF PLANT AND MACHINERY. 4. THE LEARN ED CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER THROUGH A BRIEF ORDER. THE LEARNED CIT(A) INFERRED THAT THE ASSESSEE HAS PURCHASED PLANT AND MACHINERY BY USING THE LOAN OBTAINED FROM WIPRO FINANCE LTD. HE OBSERVED THAT PAYMENT TO SUPPLIERS OF THE PL ANT AND MACHINERY WAS MADE BY FIRST FROM WORKING CAPITAL WHICH WAS INCREASED BY LOAN OBTAINED FROM ITA NO. 105 0/AHD/2006 3 WIPRO FINANCE LTD. THUS THE LOAN OBTAINED FROM WIPRO FINANCE LTD WAS ULTIMATELY USED TO ACQUIRE PLANT AND MACHINERY FOR WHICH HIRE PURCHASE AGREEMENT WAS SI GNED BY THE WIPRO FINANCE LTD. THE COST OF MACHINERY SHOULD THUS BE REDUCED FROM THE TOTAL COST BY THIS AMOUNT AS PER EXPLANATION 10 OF SECTION 43 OF THE ACT. ACCORDING TO HIM GRANT/WAIVER ETC., SO RECEIVED SHALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASSET. 5. AGAINST THIS, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT IT IS INCORRECT ON THE PART OF THE AUTHORITIES BELOW TO INFER THAT THE ASSESSEE OBTAINED LOAN FROM WIPRO FINANCE LTD FOR THE PURPOSE OF ACQUIRING PLANT AND MACHINERY. IN FACT FINANCE WA S OBTAINED FROM THAT COMPANY FOR WORKING CAPITAL REQUIREMENT AND NOT FOR PURCHASING PLANT AND MACHINERY OR FOR MAKING PAYMENT TO THE SUPPLIERS OF PLANT AND MACHINERIES. THE LEARNED AR OF THE ASSESSEE DREW OUR ATTENTION TO PAGE 2 OF THE PB WHEREIN DETAILS OF PAYMENT TO THE SUPPLIERS OF THE PLANT AND MACHINERY HAS BEEN GIVEN, ACCORDING TO WHICH THE PAYMENTS WERE MADE PRIOR OR AFTER OBTAINING THE LOAN FROM WIPRO FINANCE LTD. HE REFERRED TO THE FOLLOWING CHART. DATAILS OF PAYMENTS MADE TO MACHINERY SUPPLIERS. BEFORE JULY 1996 TO DECEMBER,1996 RS.93,98,6764 PAYMENT MADE AT LEAST 12MONTHS BEFORE LOAN TAKEN. JANUARY 1997 TO MARCH 1997 RS.23,72,424 PAYMENT MADE AT LEAST 6 MONTHS BEFORE LOAN TAKEN. SEPTEMBER 01 TO OOCTOBER 2001 RS.2,14,86,960 PAYMENT MADE AFTER F OUR YEARS FROM LOAN TAKEN JULY 2002 TO OCTOBER 2002 RS.1,98,08,503 PAYMENT MADE AFTER 5 YEARS FROM LOAN TAKEN. BY REFERRING THE ABOVE CHART, LEARNED AR OF THE ASSESSEE SUBMITTED THAT THERE IS NO NEXUS BETWEEN THE LOAN TAKEN AND PAYMENTS MADE TO SUPPLIER S OF PLANT AND MACHINERIES. THIS LOAN TAKEN FROM WIPRO FINANCE LTD., WAS NOT UTILIZED FOR MAKING PAYMENTS TO SUPPLIER. THE LEARNED AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE NOMENCLATURE OF THE AGREEMENT HIRE PURCHASE AGREEMENT IS NOT CORRECT. THE FAC T IS THAT THE E MACHINERY WAS HYPOTHECATED FOR TAKING WORKING CAPITAL LOAN. HE REFERRED TO THE AGREEMETNDT.27.8.1997 WHICH DOES NOT INDICATE THAT WIPRO FINANCE LTD., IS FINANCING THE PLANT AND MACHINERIES. HE THEN ITA NO. 105 0/AHD/2006 4 REFERRED TO THE AGREEMENT DT.31.3.2000 WHER EBY PART OF THE LOAN WAS WAIVED AS PER ONE TIME SETTLEMENT. IT ALSO DOES NOT INDICATE THAT EITHER THE LOAN OR THE WAIVER THEREOF WAS FOR MEETING THE COST OF PLANT AND MACHINERY. THE LEARNED AR OF THE ASSESSEE THEN SUBMITTED THAT WAIVER OF PART OF THE PRINC IPAL AMOUNT OF LOAN CANNOT BE TERMED AS SUBSIDY TOWARDS THE COST OF FIXED ASSETS AS ENVISAGED U/S.43 AND EXPLANATION 10 THEREOF. 6. AGAINST THIS, THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SURRENDER OF A PART OF THE L OAN IS IN FACT A GRANT WHICH WOULD BE COVERED BY EXPLANATION 10 OF SECTION 43(1) AND THEREFORE, THE AMOUNT OF LOAN SO WAIVED WILL BE REDUCED FROM THE ACTUAL COST FOR THE PURPOSE CALCULATING THE DEPRECIATION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF T HE PARTIES AND PERUSED THE MATERIALS ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAD PL ANT AND MACHINERY ALREADY EXISTING PRIOR TO THE RECEIPT OF FINANCE FROM WIPRO FINANCE LTD. IT IS APPARENT FROM THE CHART OF PAYMENT REFERRED TO BY THE LEARNED AR OF THE ASSESSEE. THIS CLEARLY INDICATES THAT THE LOAN WAS NOT GIVEN DIRECTLY OR INDIRECTLY FOR THE PURPOSE OF PURCHASING PLANT AND MACHINERY. THE ARGUMENT OF THE ASSESSING OFFICER, CIT(A) AND THE LEARNED DR THAT THE LOAN FROM WIPRO FINANCE LTD., WAS USE D TO REPAY THE SUPPLIERS OF PLANT AND MACHINERIES IS NOT ACCEPTABLE BECAUSE NO SUCH NEXUS IS ESTABLISHED BY THE REVENUE. THE AGREEMENT OF THE ASSESSEE WITH WIPRO FINANCE LTD., TO WHICH THE LEARNED AR OF THE ASSESSEE HAS REFERRED IT SPEAKS OF HI R E PURCHASES . THE ACTUAL COST OF THE MACHINERY IS SHOWN ATRS.5,31,62,364 AND LOAN IS APPROVED AT RS.3 CRORES . A READING OF THIS AGREEMENT SUGGESTS THAT THE ASSESSEE HAS ACTUALLY HYPOTHECATED GI PLANT TO WIPRO FINANCE L T D., FOR OBTAINING THE LOAN. THE ASSESSEE WOULD B E PAYING RENTALS TO WIPRO FINANCE LTD., AS PER SCHEDULE TO THE AGREEMENT. THE LEARNED DR REFERRING TO THIS PRESUMED THAT IT IS THE WIPRO FINANCE LTD., WHICH HAS ADVANCED MONEY FOR PURCHASING PLANT AND MACHINERY AND NOT FOR WORKING CAPITAL REQUIREMENT. THE HIRE PURCHASE AGREEMENT AS PER THE LEARNED DR REFERS TO RENTALS TO BE PAID BY THE ASSESSEE MEANING THEREBY ASSETS FOR THE TIME BEING ARE OWNED BY WIPRO FINANCE LTD AND THEREFORE, IF A PART OF THE LOAN IS WAIVED THEN THAT PART WILL BE REDUCED FROM THE ACTU AL COST. WE, HOWEVER, DO NOT AGREE ITA NO. 105 0/AHD/2006 5 WITH THIS PROPOSITION. FOR AFFECTING THE ACTUAL COST THERE SHOULD BE EITHER GRANT , O R SUBSIDY , OR REIMBURSEMENT AGAINST SUCH COST. THE WORD WAIVER IS NOT USED IN EXPLANATION 10 TO SECTION 43(1). FOR THE SAKE OF CONVENI ENCE, THE SAME IS REPRODUCED AS UNDER: EXPLANATION 10. WHERE A PORTION OF THE COST OF AN ASSET ACQUIRED BY THE ASSESSEE HAS BEEN MET DIRECTLY OR INDIRECTLY BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR ANY AUTHORITY ESTABLISHED UNDER ANY LAW OR BY AN Y OTHER PERSON, IN THE FORM OF A SUBSIDY OR GRANT OR REIMBURSEMENT (BY WHATEVER NAME CALLED), THEN, SO MUCH OF THE COST AS IS RELATABLE TO SUCH SUBSIDY OR GRANT OR REIMBURSEMENT SHALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE : IN T HE MAIN SUB - SECTION THE WORD S MADE DIRECTLY OR INDIRECTLY BY DIRECTLY BY ANY OTHER PERSON OR AUTHORITY MEAN THAT THERE HAS TO BE A VOLUNTARY ACT ON THE PART OF THE ANY OTHER PERSON OR AUTHORITIES TO MEET THE COST OF THE ASSETS. IN THE PRESENT CASE WIPR O FINANCE LTD HAD NOT MET THE COST OF ASSETS. WE HAVE ALREADY OBSERVED THAT A WHOLE READING OF THE AGREEMENT DOES NOT INDICATE THAT WIPRO FINANCE LTD WAS IN ANY WAY INTENDING TO MEET THE COST OF THE ASSETS. HYPOTHECATION OF PLANT AND MACHINERIES FOR OBTAI NING OF LOAN IS NOT EQUIVALENT TO THE MEETING THE COST OF THE ASSETS. EXPLANATION 10 OF SECTION 43(1) ONLY REFERS TO PRORATA DEFERMENT OF ANY COST MET BY ANY AUTHORITIES OR PERSON BY WAY OF GRANT, SUBSIDY OR REIMBURSEMENT. IT DOES NOT REFER TO ANY WAI VER OF ANY LOAN. SUBSIDY HAS BEEN DEFINED AS FINANCIAL AID GRANTED BY THE GOVERNMENT TO A BUSINESS ENTERPRISES IN ORDER TO ENCOURAGE IT IN PRODUCTION , QUANTITY OR QUALITY - WISE , AND TO HEL P TO SALE OF COMMODITIES PRODUCED AT A LOWER RA TE. IN ADVANCE LAW LEX ICON , 3 RD ADDITION (2005) PAGE 4524,THE WORD SUBSIDY HAS BEEN DEFINED AS UNDER : SUBSIDY DEFINED. 545 V. C. 31, S. 9. (SUBSIDUM.) AN AID, TAX, OR TRIBUTE GRANTED TO THE KING FOR THE URGENT OCCASIONS OF THE KINGDOM, TO BE LEVIED ON EVERY SUBJECT OF AB ILITY, ACCORDING TO THE VALUE OF HIS LANDS OR GOODS. (TOMLIN). MONEY CONTRIBUTED BY A STATE GOVERNMENT, INSTITUTION, OR PERSON, IN BEHALF OF ANY SPECIAL OBJECT. SUBSIDY GENERALLY MEANS MONEY GRANTED BY THE STATE OR A PUBLIC BODY TO KEEP DOWN THE PRICES OF COMMODITIES. SUBSIDY MAY BE IN THE NATURE OF DIRECT OR INDIRECT GOVERNMENT GRANTS ON PRODUCTION OR EXPORTATION OF GOODS INCLUDING ANY SPECIAL SUBSIDY ON TRANSPORTATION OF ANY PARTICULAR PRODUCT. (ANTI - DUMPING LAW) ITA NO. 105 0/AHD/2006 6 AGREED SUM PAID, OVER AND ABOVE MARKET CHARGES, TO ASSURE SUPPLY OR SERVICE THAT WOULD OTHERWISE BE UNAVAILABLE BECAUSE OF LACK OF PROFIT. (BUSINESS TERM) THE FINANCIAL AID GRANTED BY THE GOVERNMENT TO A BUSINESS ENTERPRISE IN ORDER TO ENCOURAGE RISE IN PRODUCTION, QUANTITY AND QUALITY WISE, A ND ALSO TO HELP SELL THE COMMODITY PRODUCED, AT A LOWER PRICE. (BANKING) SUM PAID (BY GOVERNMENT) TO COMPANIES IN CERTAIN INDUSTRIES TO ENABLE THEM TO SELL THEIR GOODS OR SERVICES AT A PRICE CLOSE TO THE PREVAILING MARKET PRICE. A SUBSIDY IS ALSO USED TO PROVIDE FINANCIAL SUPPORT TO A COMMERCIAL OR QUASI - COMMERCIAL ACTIVITY THAT WOULD OTHERWISE NOT BE VIABLE IN NARROW PROFIT - AND - LOSS TERMS, USUALLY IN ORDER TO SUSTAIN BROADER ECONOMIC AND SOCIAL BENEFITS (BUSINESS; INSURANCE; INTERNATIONAL ACCOUNTING). T HE WORD GRANT USED IN EXPLANATION 10 MEANS ANY SUM OR MONEY PAID AS AN AID OUT OF THE STATE FUNDS OR FUNDS OF ANY INSTITUTION. THE WORD REIMBURSEMENT IS DEFINED AS PAYMENT OF WHAT HAS BEEN SPENT. ON PAGE 4029 OF ADVANCE LAW LEXICON, IT IS DEFINED AS UN DER : REIMBURSEMENT . IN ORDINARY PARLANCE REIMBURSEMENT MEANS REPAYMENT OF WHAT HAS BEEN SPENT. TO REIMBURSE IS TO REPAY WHAT IS EXPENDED (DEEPAK FERTILISER & PETROLEUM CHEMICALS CORPN.LTD. V. UNION OF INDIA, (1996) 381 DRJ 209), THE WORD REIMBURSEMENT MEANS AND IMPLIES RESTORATION OF AN EQUIVALENT FOR SOMETHING PAID OR EXPENDED. IT PRESUPPOSES PREVIOUS PAYMENT. TATA IRON & STEEL CO. LTD. V. UNION OF INDIA (2001) 2 SCC 41, PARA 16, THE ACT OF PAYING BACK SOMEBODY FOR HIS OR HER OUT - OF - POCKET EXPENSE (IN VESTMENT). IT MAY BE SEEN THAT THE WORD WAIVER HAS NOT BEEN USED EITHER IN THE MAIN SECTION OR IN THE EXPLANATION. FROM A COMBINED READING OF THE CONCEPT OF THE THREE TERMS SUBSIDY, GRANT AND REIMBURSEMENT, IT APPEARS THAT THEY HAVE THE FOLLOWING COMMON CHARACTERIST IC S. (1) GOVERNMENT AUTHORITY OR ANY OTHER PERSON IS GIVING MONEY AS AN AID TO THE ASSESSEE TO PURCHASE AN ASSET. (2) THIS AID , TERMED AS GRANT OR SUBSIDY IS GIVEN TO A BUSINESS ENTREPRENEUR EITHER TO AUGMENT ITS CAPITAL OR TO PROVIDE FINANCIAL SUPPORT FOR SUSTAINING PRODUCTION AND MAINTAINING PRICE, OR SETTING UP AN INDUSTRY , OR FOR PURCHASE OF ASSET FOR INDUSTRIES . ITA NO. 105 0/AHD/2006 7 (3) TO COMPENSATE CERTAIN EXPENSES INCURRED BY THE ASSESSEE BY RE IMBURSING THE EXPENDITURE EITHER ON CAPITAL ASS ETS OR ON OTHER BUSINESS EXPENSES. (4 ) THERE IS GENERAL INTENTION OF THE AUT HORITY OR OTHER PERSON TO FOREGO THE SUM AT THE TIME OF GRANT THEREOF. WHEN WE APPLY THE ABOVE PRINCIPLES TO THE FACTS OF THE PRESENT CASE, WE NOTICE THAT WIPRO FINANCE LTD I S OF THE INTENTION TO RECOVER THE LOAN FROM THE ASSESSEE. IT WAS NOT GIVEN AS TO MEET OUT THE COST OF ANY PLANT AND MACHINERY PARTLY, FULLY DIRECTLY OR INDIRECTLY. AS PER PAGE 4922 OF ADV. LAW LEXICON , WAIVER WOULD MEAN VOLUNTARY RELINQUISHMENT OF A LEGA L RIGHT OR ADVANTAGE BENEFIT , CLAIM OR PRIVILEGE . THUS , ACT OF WAIVER WOULD COME POSTERIOR WHEREAS GRANT AND SUBSIDY ARE ENTERIOR OF THE TRANSACTION, I.E., PURCHASES OF PLANT AND MACHINERY IN THE PRESENT CASE . THE REIMBURSEMENT I S ALWAYS POSTERIOR TO THE T RANSACTION (OF PURCHASE OF PLANT AND MACHINERY). THEREFORE, THE WAI V ER OF LOAN IS ALSO NOT EQUIVALENT TO REIMBURSEMENT AND THEREFORE WILL NOT FALL UNDER THE CATEGORY OF REIMBURSEMENT. W AIVER IS ALSO NOT EQUIVALENT TO GRANT OR S UBSIDY . THUS, THE WAIVER D OES NOT FALL INTO EI THER OF THE THREE TERMS USED IN EXPLANATION 10 OR PROVISO THEREOF. FURTHER THERE HAS TO BE DIRECT NEXUS OF LOAN WITH PURCHASE OF PLANT AND MACHINERY. IN THE PRESENT CASE, PLANT A ND MACHINERY ARE ALREADY EXISTING PRIOR TO TAKING THE LOAN . THEREFORE, GRANT OF LOAN BY WIPRO FINANCE LTD., CANNOT BE RELATED TO THE PURCHASE OF PLANT AND MACHINERY. THEREFORE , IT CANNOT BE INFERRED THAT IT WAS GIVEN TO MEET THE COST OF PLANT AND MACHINERY. ONCE , THE SUM OFRS.86,02,061 WAIVED BY WIPRO FINANCE LTD AS OTS , CANNOT BE RELATED TO PUR CHASE OF PLANT AND MACHINERY, IT CANNOT BE REDUCED FROM THE COST FOR THE PURPOSES OF REDUCING ALLOWABLE DEPRECIATION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 31.07.09 SD/ - SD/ - ( D.C.AG RAWAL ) ACCOUNTANT MEMBER. (T.K.SHARMA) JUDICIAL MEMBER DATE: 31.07.09 (H.K.PADHEE) SENIOR PRIVATE SECRETARY. ITA NO. 105 0/AHD/2006 8 COPY OF THE ORDER FORWARDED TO : 1. THE ASSESS EE 2. THE ASSESSING OFFICER 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. THE DR, AHMEDABAD 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, DEPUTY.REGISTRAR.