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2016 (3) TMI 909 - AT - Income TaxDisallowance of Depreciation by reducing Written down value of assets by subsidy received - treatment of subsidy received by the assessee - Held that:- The comparison of the Package Scheme of Incentives, 1993 and Package Scheme of Incentives, 2001 reflects that two schemes are similarly offered for establishing SSI units in under-developed areas. Under the first Scheme, in the case of Rohit Exhaust Systems Pvt. Ltd. Vs. ACIT (2015 (3) TMI 1151 - ITAT PUNE), the assessee therein had established a unit in the district of Aurangabad. However, the assessee before us has established a unit in the district of Jalna. The claim of the assessee before us has been that though the quantification of the claim is linked to the cost of fixed assets, however, the provisions of Explanation 10 to section 43(1) of the Act are not to be invoked since the incentive has been given to the assessee for establishing a unit and not for meeting the cost of fixed assets. In view of the ratio laid down above we hold that there is no merit in the orders passed by the authorities below. The assessee had received the subsidy for setting up a unit in the specified area and such subsidy received by the assessee is a capital receipt in the hands of assessee, cost of which is not to be reduced from the written down value of fixed assets. Further, the CIT(A) had placed reliance on series of decisions, which were also relied upon by the CIT(A) while deciding the appeal in the case of Rohit Exhaust Systems Pvt. Ltd. Vs. ACIT (supra). The Tribunal has considered the said reliance and had decided the issue holding that the incentive received by the assessee under Package Scheme of Incentive, 1993 in the form of subsidy was not covered under the provisions of Explanation 10 to section 43(1) of the Act. Following the same parity of reasoning, we hold that the Package Scheme of Incentives 2001 is similar to the Package Scheme of Incentives, 1993 and the incentive received by the assessee before us is not covered under the provisions of Explanation 10 to section 43(1) of the Act. Consequently, the subsidy amount received by the assessee is not to be reduced from the cost of assets. The Assessing Officer is thus, directed to re-work the depreciation allowable in the hands of assessee on the aforesaid assets. - Decided in favour of assessee
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