TMI Blog2018 (5) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income Tax (Appeals), 2, Kolkata dt. 04-04-2016 for the A.Y 2011-12. 2. The only issue is to be decided as to whether the CIT-A justified in deleting the addition of ₹ 35,59,939/- made on account of depreciation on capital subsidy in the facts and circumstances of the case. 3. After hearing both the parties, we find that the issue raised in the appeal is covered by the order dt. 02-04-2014, copy of the same is on record, in assessee s own case in ITA No. 1398/Kol/2011 for the A.Y 2007-08, wherein the Tribunal following the decision of the Hon ble Supreme Court in the case of P.J. Chemicals Ltd upheld the order of the CIT-A in allowing the claim on depreciation on capital subsidy. The ld. AR submits that the said ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded to subsidize the cost of any fixed asset, therefore, it cannot be said that the subsidy was to meet a portion of cost of the asset. According to us, the assessee has rightly not reduced the amount of subsidy received from the actual cost/WDV of the fixed assets while claiming depreciation. It is also a fact that revenue during scrutiny assessments of the assessee for A.Y 2003-04 and 2004-05, the above stated subsidy was considered as capital receipt accepting the contention of the assessee. For the sake of consistency also the AO should not have managed the stand now. Even Hon ble Supreme Court in the case of CIT vs. P.J. Chemicals Ltd (1994) 210 ITR 830(SC) has considered this issue and held that where Government subsidy is intended a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). The said Explanation provides that where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of subsidy or grant or reimbursement ( by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee. It is further, provided thereunder that where such subsidy or grant or reimbursement of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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