TMI Blog2011 (4) TMI 1455X X X X Extracts X X X X X X X X Extracts X X X X ..... ant and as such it would reduce the cost. 1.1 It was proved before the ld. CIT(A) and the ld. AO that the grant was received towards the corpus of the entity and as such no disallowance out of depreciation can be made. 2. The ld. CIT(A) should have considered the fact that the assessee has applied for registration u/s 12A/12AA and the application is not disposed off of the ld. CIT. Thus, the assessment should have been framed as per provisions of Section 11 to 13 of the Income-tax Act, 1961, and the depreciation should have been allowed as claimed. 3. The ld. CIT(A) has erred in upholding the reopening of assessment as not invalid. 3. Shri Girish Dave appeared on behalf of the assessee alongwith Shri S. S. Deshpande, C. A. and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed from year to year on the assets. The AO has, however, noted that the grant has been permitted to be relatable to the assets purchased by the assessee and hence as per Explanation 10 of Section 43 of the Act, the value of plant and machinery was to be reduced by the grants resulting into disallowance of depreciation @ 25%. The AO accordingly disallowed and added back the depreciation which was challenged by the assessee before the CIT(A), who confirmed the action of the AO and the assessee is in further appeal before us. 7. At the out-set, the ld. Authorized Representative placed on record the decision of the Hon'ble Supreme Court in the case of P.J. Chemicals Limited, 210 ITR 830, wherein it was held that amount of subsidy for g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, the ld. Senior D.R. relied on the orders of the lower authorities. 9. We have carefully considered the rival contentions and deliberated on the case laws cited by the ld. Authorized Representative in the context of factual matrix of the case. In the instant case, the assessee being a society set up by the Government of India, for carrying on activity of providing technical and consultancy services for small scale unit. It got Government grant towards capital funds. By utilizing these funds and its own capital, it acquired plant and machinery and building. While allowing assessee s claim for depreciation on such plant and machinery and building, the AO reduced the actual cost by the amount of grant after applying Explanation 10 to Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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