TMI Blog1990 (3) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... not be deducted from the cost of the capital assets mainly plant and machinery and factory building ?" The assessment year involved is 1980-81 for which the relevant accounting year ended on June 30, 1979. The facts of this case, as is evident from the statement of case, are as follows: "The assessee is a private limited company. It derives income from the business in the manufacture and sale of raw silk fabrics. The assessment year involved in this reference is 1980-81, the relevant previous year was the year ending June 30, 1979. Under the Central Outright Grant or Subsidy Scheme, 1971, introduced by the Central Government and implemented by different State Governments, the assessee received certain sums as subsidy from the M. P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been given specifically towards the acquisition of the fixed assets and so the cost of the fixed assets to the assessee could not be reduced by the amount of subsidy for the purpose of determining the written down value for the purpose of section 43(1) of the Act. Respectfully following the aforesaid decision of the Special Bench of the Tribunal, the Tribunal upheld the order of the Commissioner (Appeals) and dismissed the departmental appeal." In this case, both the Commissioner (Appeals) and the Tribunal relied on a Special Bench decision in the case of Dewas Textile Mills (P.) Ltd. which is a sister concern of the assessee-company. In that case, it was decided that the amount of subsidy was given after the capital assets of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidy, the amount of capital assets could not be reduced by the amount of subsidy that has been paid by the Government under the scheme. The Tribunal has followed a decision of the Special Bench of Tribunal on identical facts in respect of a sister concern of the assessee-company. In our view, the Tribunal has rightly decided on the point that the subsidy could not be deducted from the cost of the capital assets of the company on the ground that the capital assets were not purchased with that subsidy and no part of that amount was paid towards reimbursement of the cost of acquisition of the capital asset. As such, the Tribunal has rightly decided the point and, accordingly, the question is answered in the affirmative and in favour of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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