TMI Blog2013 (10) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal to consider the issue afresh bearing in mind the nature of subsidy, purpose for which the same was made available and all other relevant factors bearing in mind the case laws cited before us and which may further be argued before the Tribunal by both the sides - TAX APPEAL NO. 342 to 345 of 2012 - - - Dated:- 12-2-2013 - AKIL KURESHI AND SONIA GOKANI , JJ. For the Appellant : J.P. Shah. For the Respondent : K.M. Parikh. ORDER:- PER : Akil Kureshi These Tax Appeals have been filed by the assessee challenging the common order of the Income Tax Appellate Tribunal (for short "ITAT"). We may notice the facts narrated in Tax Appeal No.342 of 2012. In such Appeal, the assessee has presented following substantial ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Tribunal and the Tribunal though substantially upheld the view of the Commissioner, in the last paragraph of the judgment, made certain observation against the assessee which is the subject-matter of these appeals. Such observation is reproduced as under: "But at the same time, we direct the AO to consider the receipt as subsidy received by the assessee for fixed assets and therefore, the AO should recalculate the depreciation as per the law after reducing the amount of subsidy from the cost of fixed assets as per the provisions of section 43(1) of the Act. Before doing so, the AO should provide reasonable opportunity of being heard to the assessee and thereafter he should pass necessary order as per the law on these aspects. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel vehemently contended that the appeal of the Revenue before the Tribunal was whether the Commissioner (Appeal) was justified in treating the receipt as capital in nature. The Tribunal having confirmed such a view of the CIT (Appeals), thereafter, had no jurisdiction to pass any further order. To our mind, such contention cannot be accepted. Firstly, as already noted, under sub-section (1) of section 254 of the Income-tax Act, the Tribunal enjoys considerable power of discretionary character of passing such order as it thinks fit on an appeal presented before it either by the assessee or by the Revenue. The only requirement is that both parties to the appeal should be given a hearing. Secondly, in essence, what the Tribunal did by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second question is concerned, we are, prima facie, of the opinion that the Tribunal proceeded on the basis that the moment there is a receipt of capital in nature by way of subsidy or incentive, the same should go to reduce the cost of acquisition as a necessary corollary. It appears that the Tribunal did not examine the nature of the scheme and the purpose for which the subsidy was being made available and such other relevant factors while deciding such an issue. In this respect, following three decisions cited by Shri J.P. Shah would be relevant. (i) CIT v. Grace Paper Industries Pvt. Ltd., 183 ITR 591. (ii) Mehesana Distt. Coop. Milk Pro. Union v. CIT ., 258 ITR 780. (iii) CIT v. Swastik Sanitary Works Ltd. , 286 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and noted by us in earlier order dated 08.01.2013. 8. Though applicability of the proposition canvassed by the Tribunal itself was open to argument on the basis of facts on record, in our opinion, the Tribunal committed an error in giving directions 1) without availing opportunity of hearing to the assessee and 2) without discussion of facts on record or law applicable to it. The relevant observation of the Tribunal is only discussed to throw light on this aspect of the matter. 9. Under the circumstances, we request the Tribunal to consider the issue afresh bearing in mind the nature of subsidy, purpose for which the same was made available and all other relevant factors bearing in mind the case laws cited before us and which may furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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