COMMISSIONER OF INCOME TAX Vs. MENEZES FARMACO

JUDGEMENT

(1.) BY this reference under Section 256(1) of the Income -tax Act, 1961, the Income -tax Appellate Tribunal has referred the following question of law to this court for opinion at the instance of the Revenue :

(2.) THE material facts of the case are as under :

(3.) WE have carefully considered the rival submissions and perused the two decisions of the Supreme Court referred to above. In CIT v. P. J. Chemicals Ltd. : [1994]210ITR830(SC) , the controversy before the Supreme Court was whether the subsidy received by the assessee could be deducted in computing the actual cost for calculating depreciation. The Supreme Court took note of the sharp divergence of judicial opinion on this point. The High Courts of Andhra Pradesh, Bombay, Allahabad, Calcutta, Gau -hati, Gujarat, Karnataka, Kerala, Madras, Madhya Pradesh, Orissa and Rajasthan had taken a view upholding the assessee's claim and held that the Central subsidy should not be deducted from the actual cost of the asset for allowing depreciation. The only dissenting view was of the Punjab and Haryana High Court in CIT v. Jindal Bros. Rice Mills . The apex court in CIT v. P. J. Chemicals Ltd. : [1994]210ITR830(SC) had held that Central subsidy should not be deducted from the actual cost of the asset for the purpose of allowance of depreciation. While coming to this conclusion, it was observed (page 839) :