1996 (1) TMI 16 - HC - Income Tax

Summary

Issues:
1. Whether the Central Government subsidy is deductible from the actual cost of plant, machinery, and building for the purpose of allowing depreciation.
2. Whether the Tribunal was justified in upholding the addition of a specific amount representing excessive consumption of dyes and chemicals by the assessee.

Analysis:

Issue 1:
The Revenue sought to refer the question of deductibility of Central Government subsidy from the actual cost under section 43(1) of the Income-tax Act, 1961. The Tribunal dismissed the application citing a previous judgment in favor of the assessee. The Tribunal's decision was supported by the Supreme Court's ruling in CIT v. P. J. Chemicals Ltd., where it was established that the Government subsidy is not to be deducted from the actual cost for depreciation calculation purposes. The Tribunal's refusal to refer this question to the High Court was deemed correct based on the existing legal precedents.

Issue 2:
Regarding the addition of Rs. 20,53,037 made by the assessing authority, the Commissioner of Income-tax (Appeals) reduced the amount to Rs. 1,00,000 after considering various factors. The Tribunal upheld this decision, stating that the determination of the addition amount was a question of fact. Both the Commissioner and the Tribunal based their decisions on the available evidence and material on record. The Tribunal found no legal errors or lack of evidence in the Commissioner's decision, concluding that no question of law arose from the factual findings. Therefore, the Tribunal dismissed the Revenue's application under section 256(2) of the Act, as no referable question of law was identified in the matter.

In conclusion, the High Court dismissed the Revenue's application as no merit was found in the issues raised. The Tribunal's decisions were upheld based on existing legal precedents and factual considerations, leading to the rejection of the application under section 256(2) of the Income-tax Act, 1961.