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TMI Blog1983 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... --Appeal by the assessee--(i) Validity of reopening u/s 147 (b) of the IT Act,1961. The original assessment was made on 20th Jan., 1979, The accounting year is calendar year 1975. The assessee had received in 1976 relevant to subsequent asst. yr. 1977-78 a subsidy of Rs. 4,80,896 from the Central Government through the Kerela Government as grant-in-aid. The ITO who got the information about the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in assessee's own case for asst. yr. 1977-78 cited in the appellate order that such subsidy does not go to reduce the cost. However, for the purpose of this reopening we will take that it goes to reduce the cost. Then the subsidy was received in 1976. The original assessment was completed in February, 1979. However, here also we will take it that the ITO knew about the receipt only after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h this subsidy. Perhaps in 1976 relevant to 1977-78 the ITO May be right. The question whether it would reduce the cost of asset or not is pending consideration before the High Court. But there is no nexus between the receipt of subsidy and escapement of income in 1975 relevant to this asst. yr. 1976-77. The belief of the ITO is without any material to that effect. It is only a guesswork or reckle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government in the year of purchase of the machinery itself and that the actual payment only is delayed upto 1976. But such arguments are against the very scheme of subsidy. A portion of the cost is met by another person only when it is actually paid, particularly so when the assessee has no statutory or contractual right or any other right to receive the subsidy. It is only an incentive or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing this question as the reassessment is cancelled. The issue is left open. 7. (2) ITA No. 232 (Mds)/83--Departmental appeal (i) Depreciation and development rebate: The Tribunal in assessee's own case for asst. yr. 1977-78 had held that the subsidy does not reduce the cost. So it followed that depreciation and development rebate have to be allowed without any reduction of the cost. So, following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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