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TMI Blog2023 (9) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... together and are disposed of by this common order for the sake of convenience and brevity. ITA No. 3430/DEL/2018 [Assessee's Appeal. 2. The first grievance relates to the addition of Rs. 5,19,848/- on account of undervaluation of stock. 3. During the year under consideration, the assessee has disclosed closing stock of salt at Rs. 23,66,343/- and closing stock of rice at Rs. 1,58,36,461/-. The Assessing Officer was of the opinion that since freight expenses have separately been debited to the profit and loss account, but not included in the valuation of closing stock, the assessee has undervalued its closing stock. Taking freight charges into consideration, the Assessing Officer computed the undervaluation of closing stock for salt at R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 5,19,848/-. Thus, ground is allowed. 10. Second grievance of the assessee relates to the addition on account of subsidy. 11. The peculiar facts in this issue are that during the A.Y 1999-2000, the assessee has received capital subsidy of Rs. 50 lakhs sanctioned by the Director of Industries, Government of Punjab in the year 1995 under Industrial Policy issued by the Government of Punjab. Since the said subsidy was received with a view to promote growth of industry in the State of Punjab and for generation of employment, the subsidy, being on capital account, was directly credited by the assessee to the capital reserve in the books of accounts for the year ending on 31.3.1999 and the same was accepted by the revenue. 12. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee satisfied all the conditions for being eligible, it received subsidy of Rs. 50 lakhs during the financial year 1998-99. The said incentive was taken to the 'capital reserve account' and was claimed as non-taxable in the return of income for assessment year 1999-00, treating the same as capital receipt. The same was accepted by the Assessing Officer. 16. However, during the year, the Assessing Officer has taken a position that since it has been given a part of capital investment, cost of assets needs to be reduced as per Explanation 10 to section 43(1) of the Act. We are of the considered view that the said section is not applicable on the facts of the case in hand in as much as the subsidy has not been granted for meeting cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The Government subsidy, it is not unreasonable to say, is an incentive not for the specific purpose of meeting a portion of the cost of the assets, though quantified as or geared to a percentage of such cost. If that be so, it does not partake of the character of a payment intended either directly or indirectly to meet the "actual cost". We should prefer the reasoning of the majority of the High Courts to the one found acceptable by the High Court of Punjab and Haryana." (emphasis supplied). 18. In a similar case, the Hon'ble Gujarat High Court in the case of Ellora Time Pvt Ltd. Tax Appeal No. 1011 of 2010 (Guj.), held as under: "the assessee was, inter alia, engaged in the business of generation of power through windmills. Dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It would not be out of place to mention that even if the action of the Assessing Officer has to be accepted, then the same should have been taken in A.Y 1999-2000. However, we find that no action has been taken from A.Y 1999-2000 to A.Y 2006-07. Therefore, there being no change in the facts, it would be incorrect to take a different stand after a gap of 10 years. Considering the facts of the case in totality, we do not find any merit in the action of the Assessing Officer/ld. CIT(A). We, accordingly, direct the Assessing Officer to delete the impugned addition. 20. Appeal of the assessee is allowed. ITA No. 4921/DEL/2018 [Revenue's appeal 21. Grievance of the Revenue read as under: I. Because the Ld. CIT(A) has erred in law and facts f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in facts for deleting the addition of Rs. 1.38.65.250/- made on account of disallowance of depreciation on "Edible Oil Brand" despite that on the demerger proceedings. the assessee company M/s ABCL as well as M/s ACL has reduced its tax liability and given arrangement a 'coularble device' as shown capital gain. VI Because the Ld. CIT(A) has erred in law and facts for deleting the addition of Rs. 57.85.000/- made on account of disallowance of Royalty paid on brand "Gagan" despite that the demerger process is not according with the provisions of section 2( 19AA) of the Income Tax Act. 1961. VII Because the Ld. CIT(A) has erred in law and facts for deleting the addition of Rs. 57.85.000/- made on account of disallowance of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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