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TMI Blog2014 (1) TMI 1747X X X X Extracts X X X X X X X X Extracts X X X X ..... from WDV of Plant and Machinery and the disallowance of proportionate depreciation. 2.1 Briefly stated, the assessee, a company during the previous year relevant to the assessment year under consideration, received a subsidy of Rs. 4,11,43,000/- under "Bihar Incentive Package, 2006" for undertaking expansion of the capacity from 8500 TCD to 10000TCD. The said scheme was formulated by the Government of Bihar to promote the establishment of new units and for expansion of capacity of existing units. According to the said scheme, 10% subsidy on fixed capital investment (Machinery & Equipments) subject to maximum subsidy upto to Rs. 10 crores was granted in case of New Mill/Expansion of capacity. The assessee company had treated the said subsid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 of the paper book and demonstrated the purpose for which the incentive scheme has been devised by the Government of Bihar. Further, the Ld. Counsel has explained that the amount of such subsidy cannot be held to reduce the actual cost of assets u/s 43(1) Explanation 10 of the Act. The Ld. Counsel has also placed reliance on the decisions of the Tribunal in the cases of M/s. Godrej Agrovet Ltd. in ITA No. 1629/Mum/2009 for the assessment year 2005-06, Inventaa Chemical Ltd. Vs. ACIT (42 SOT 249), Sasisri Extractions Ltd. Vs. ACIT (122 ITD 428) and Capital Foods Exports Pvt. Ltd. Vs. ACIT (139 ITD 584) and the decision of the Hon'ble Apex Court in the case of CIT Vs. P.J. Chemicals Ltd [210 ITR 830 (SC)]. 2.3 We have heard both the sides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said scheme read together with the said guidelines issued by the Bihar Government indicates that the subsidy is granted with the object of incentive for the entrepreneurs to establish sugar industry/expand the capacity in the state of Bihar and thus the said subsidy is given for setting up of industry or expansion of industry in the state of Bihar. We concur with the said observation of the Ld.CIT(A) that the said subsidy is given for setting up of industry or expansion of industry in the state of Bihar which is the object of the scheme. In this connection, it is relevant to state that in the case of Sasisri Extractions Ltd. (supra), the Tribunal has held that where subsidy is granted as percentage of fixed capital cost taken as basis fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue has not brought on record that the subsidy received by the assessee is directly or indirectly resulted in acquisition of any asset, we are of the considered opinion that the capital subsidy of Rs. 4,11,43,000/- received by the assessee company under 'Bihar Incentive Package 2006' for undertaking expansion of its capacity from 8500 TCD to 10000 TCD cannot be deducted from WDV of plant and machinery. Since the Ld.CIT(A) has correctly appreciated the facts and the position of law aforementioned for reversing the order of the AO, we do not find any infirmity in the decision of the Ld.CIT(A) on this count and thus the same is upheld. Resultantly, Ground No.1 is dismissed. 3. In Ground No. 2 the revenue has agitated the action of the Ld.CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO. On the other hand, the Ld.Senior Counsel for the assessee has argued that the Ld.CIT(A) has correctly deleted the impugned addition by treating the reimbursement of excise duty as capital in nature by relying on the decisions of the Hon'ble Apex Court in the cases of Mepco Industries Ltd. Vs. CIT 319 ITR 208, CIT Vs. Ponni Sugars And Chemicals Ltd. 306 ITR 392, the decision of the Calcutta High Court in the case of CIT Vs Rasoi Ltd. 335 ITR 438 (CAL), the decision of the High Court of Gujarat in the case of CIT Vs. Tripti Menthol Industries 35 taxmann.com 515 (Gujarat) and the decision of the J&K High Court in the case of Shree Balaji Alloys Vs. CIT 333 ITR 335 (J&K). 3.3 We have heard both the sides and perused the material on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the decision of the Hon'ble Apex Court in the case of Apollo Tyres Ltd. Vs. CIT 250 ITR 273, wherein it has been held that the AO while computing the income under section 115J has only the power to examine whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the said Act. The AO, thereafter, has the limited power of making increases and reductions as provided for in the explanation to the said section. To put it differently the AO does not have the jurisdiction to go behind the net profit shows in the P&L Account except to the extent provided for the explanation of section 115J. Also, it is noted that while deciding grounds no. 1 & 2 in respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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