COMMISSIONER INCOME TAX Vs. SHIVALIK AGRO

JUDGEMENT

(1.) -By this common judgment and order we propose to dispose of the above said Income Tax References.

(2.) All the references are under sub -section (I) of section 256 of the Indian Income -tax Act, 1961 ("the Act" in short) from the Income -tax Appellate Tribunal, Chandigarh on the prayer of the Revenue. The common question has been referred to this Court for opinion. We may refer to only one question in Income -tax Reference No. 1 of 1991. The said question is : "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that cash subsidies received by the assessee are not to be deducted from the cost of machinery and plant and building under section 43 (1) of the Income -tax Act, 1961, for determining their actual cost for the purposes of depreciation under section 32 of the Act. -

(3.) We may also refer to the facts of the case in the above Reference (1 of 1991). The Assessing Officer in this case found that subsidy received for the value of capital assets, the assessee did not reduce the said subsidy to work out depreciation and investment allowance. Accordingly the Assessing Officer disallowed the deduction of subsidy received in that respect and made the assessment accordingly; thereby allowing the depreciation and investment allowance after reducing the subsidy from the value of assets. Being aggrieved, the assessee filed an appeal before the Commissioner of Income -tax (Appeals) who decided the case in favour of the assessee. An appeal was laid by the Revenue before the Tribunal which was also decided in favour of the assessee.