COMMISSIONER OF INCOME TAX Vs. NOVAPAN INDIA LIMITED

JUDGEMENT

(1.) THE Revenue sought reference of the following two questions for the opinion of this court :

(2.) THE Tribunal declined reference on the ground that the decision of this court in CIT v. Godavari Plywoods Ltd. , squarely covers the questions raised in the reference application. In that decision, the Division Bench consisting of Justice B.P. Jeevan Reddy and Justice Y.V. Anjaneyulu referred to the Central Subsidy Scheme and held that the subsidy scheme with which we are concerned here was formulated to encourage and induce entrepreneurs to move to backward areas and to establish industries there. THE learned judges also observed that there is nothing in the Central Subsidy Scheme to indicate that the entrepreneurs were granted the subsidy for the specific purpose of meeting a portion of the cost of the assets. No doubt, the actual subsidy is quantified by determining the specified percentage of the capital asset. "THE specified percentage of the fixed capital cost taken as the basis for determining the subsidy is only a measure adopted under the scheme to quantify the subsidy". THE Division Bench, therefore, held that the subsidy cannot be deducted from the actual cost of the assets of the assessee as per section 43(1) of the Income-tax Act. It is brought to our notice that the S.L.P. filed against the said decision was dismissed.