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TMI Blog2015 (8) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... equent benefit of the same has to be taxed as income in the assessment year in which it is received. This admittedly is not the situation here. Moreover as held by this Court in Mahindra and Mahindra [2003 (1) TMI 71 - BOMBAY High Court ]that Section 28(iv) of the Act is applicable only on the receipt of any benefit or perquisite and would not apply to benefits obtained in cash or money. In this case also the waiver of loan is not a benefit or perquisite in kind but the right to recovery money of ₹ 79.81 lakhs is given up. Thus the issue stands concluded by the decision of this Court in Mahindra & Mahindra and the addition of Explanation 10 to Section 43 of the Act, does not in any manner impact the binding nature of this Court's orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation (10) thereto, which was inserted in the Income Tax Act,1961 by the Finance Act (No.2),1998 with effect from 01.04.1999. 3. The Respondent Assessee had entered into one time settlement with it's creditors viz.financial institution / Scheduled bank. As per the scheme of settlement, the financial institutions wrote off the principal amount of ₹ 1.05 crores loan advanced to Respondent Assessee. During the assessment proceedings the assessee contended that out of the total amount of ₹ 1.05 crores written off by the financial institutions an amount of ₹ 25.88 lakhs of loan not being in the capital field were offered for tax. So far as the balance of ₹ 79.81 lakhs was concerned it was contended that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waiver of a loan by a creditor would not amount to grant of subsidy, grant or reimbursement. Accordingly, the Revenue's appeal was dismissed. 6. The grievance of the Revenue is that in view of Explanation 10 to Section 43(1) of the Act the waiver of a loan would amount to a subsidy grant or reimbursement and thus, the costs of the fixed assets relating to which there is grant of subsidy, grant or reimbursement would stand reduced. In the above view according to the Revenue by virtue of Explanation 10 to Section 43(1) of the Act such waiver of loan is liable to be taxed as income in the hands of assessee for the subject assessment year. 7. We find that it is undisputed that the loan of ₹ 79.81 lakhs was utilised to purchase a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 43 of the Act only reduces the value of an asset but doesn't convert a transaction in the Capital field into one in the Revenue / Trading field. 8. Be that as it may, the loan being taken was undisputedly in the Capital field then its waiver should also be in the Capital field. The sine quo non for application of Section 41(1) of the Act is that a deduction must have been claimed by assessee in the Revenue field respect of the loan taken while arriving at it's profit in the earlier years so that a subsequent benefit of the same has to be taxed as income in the assessment year in which it is received. This admittedly is not the situation here. Moreover as held by this Court in Mahindra and Mahindra that Section 28(iv) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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