TMI Blog1999 (7) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... tal cost of the assets for computing the investment allowance and that the view taken by the Commissioner of Income-tax under section 263 is not correct ?" The facts, which are relevant for purposes of this reference, are as under : The assessee-company had installed plant and machinery during the year which ended on June 30, 1977, at a cost of Rs. 64,07,538. The First Income-tax Officer, Margao, determined the investment allowance at Rs. 16,01,884 as claimed by the assessee. The assessee received Central subsidy of Rs. 8,72,270 attributable to the plant and machinery. Upon receipt of Central subsidy, the amount of investment allowance was revised by the assessee to Rs. 13,83,817 by adjustment of actual cost upon receipt of Central sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this background, that the present reference is made to this court for its opinion. We have heard Shri R. V. Desai with Shri P. S. Jetley, learned counsel for the Revenue. None represents the assessee. Shri R. V. Desai has drawn our attention to the decision of this court in CIT v. Menezes Farmaco [1999] 236 ITR 780. In that case, during the previous years, relevant to the assessment years 1985-86 and 1986-87, the assessee, who was a registered firm, received Central subsidy. The Assessing Officer reduced the cost of the plant and machinery for the purpose of determining the actual cost thereof for allowance of depreciation on the ground that the amount of subsidy would go to reduce the cost of plant and machinery in the hands of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee from the Andhra Pradesh Government was taxable as revenue receipt or not. The question, whether the amount of subsidy would be deductible from the cost of the asset for finding out the actual cost for purposes of allowance of depreciation did not even arise for consideration before the Supreme Court in that case at any stage. The earlier decision in P. J. Chemicals Ltd.'s case [1994] 210 ITR 830 (SC) was not referred to because it was not relevant for deciding the point in issue in that case. The only issue in that case was, whether the subsidy received in the hands of the recipient was a revenue receipt or a capital receipt. The decision in P. J. Chemicals Ltd.'s case [1994] 210 ITR 830 (SC) was followed by this court as being a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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