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2002 (8) TMI 54 - HC - Income Tax"(i) Whether, Tribunal was right in holding that the order of the Commissioner of Income-tax under section 263 was with jurisdiction when the assessment order had merged with the appellate order dated May 24, 1984, as well as the second appellate order of the Tribunal dated May 15, 1985? - (ii) Whether, Tribunal was right in law in holding that the subsidy received by the petitioner from the State Government under the Subsidised Industrial Housing Scheme is to be deducted from the cost of machinery and plant and building under section 43(1) of the Income-tax Act, 1961, for determining the actual cost for the purposes of depreciation allowance under section 32 of the Act?" - In this case, it is an admitted fact that a part of the construction of the tenements was made by the grant from the State by way of subsidy. The amount spent by the assessee on the construction was only total cost minus the subsidy received. The definition of "actual cost" given in section 43(1) is applicable to sections 28 to 41 of the Act. This includes section 32 which deals with depreciation. The assessee's claim for depreciation for the tenements could therefore only be with reference to the "actual cost" as computed in accordance with section 43(1) of the Act. The Commissioner was, therefore, right in holding that the amount of subsidy should be deducted from the total cost of the construction of the tenements.
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