Def of income u/s 2(24)(xviii) vs sail judgement by sc

This query is : Resolved

Tarang Agrawal (Querist)
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20 March 2016 As per amendment by Finance Act, 2015 to the definition of Income u/s 2(24)(xviii) -
'Income includes .......... or waiver or.............. to the assessee other than the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of explanation 10 to section 43(1)'

Crux of Supreme Court judgement in case of Steel Authority of India Limited -
If loan taken for acquiring fixed asset is waived, the loan so waived shall be reduced from actual cost of fixed asset for which loan was taken.

As we notice, waiver of loan has been construed as income (hence chargeable as PGBP) as per amendment in definition of income and as per SAIL judgement, the same has to be reduced from cost of asset for which the loan was taken.

My query revolves around the same confusion :

Waiver of loan principal (taken to purchase capital asset) to be treated as

- income as per sec 2(24)(xviii) or
- reduced from cost of asset as per SC judgement in case of SAIL ?

Ankur Singhal

Ankur Singhal (Expert)
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20 March 2016 Dear
SC judgement in case of sail came prior to the amendment in fa 2015.
The FA 2015 has overruled the SC judgement.
Hence FA 2015 amendment will be taken into consideration for future references.
Hence follow FA 2015.

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