"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 are 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 a