TMI Blog1987 (7) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961 (hereinafter referred to as " the Act"), the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of capital subsidy of Rs. 1,28,616 was not deductible in computing the actual cost of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commissioner was of the view that the Income-tax Officer should have reduced the cost of plant and machinery by the capital subsidy of Rs. 1,28,616, for the purpose of computing depreciation and investment allowance. The Commissioner, therefore, set aside the order passed by the Income-tax Officer and directed the Income-tax Officer to make fresh assessment according to law.. Aggrieved by tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s opinion. A similar question came up for consideration before the Andhra Pradesh High Court in CIT v. Godavari Plywoods Ltd. [1987] 168 ITR 632. We may usefully refer to the following observations of Y. V. Anjaneyulu J. (page 640) : " We have examined the subsidy schemes under consideration bearing the above principles in mind. We do not find any provision either in the Central Subsidy Scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 43(1)of the Act, such subsidy can be reduced from the amount of actual cost of the assets to the assessee. It seems to us that the specified percentage of the fixed capital cost taken as the basis for determining the subsidy under the scheme is only a measure (of quantification). The subsidy is granted more as a recompense for the hardships and inconveniences which the entrepreneur ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not deductible in computing the actual cost of the asset, as defined by section 43(1) of the Act, for the purpose of calculating the depreciation and investment allowance admissible to the assessee. For all these reasons, our answer to the question referred to this court is in the affirmative and against the Revenue. In the circumstances of the case, parties shall bear their own costs of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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