COMMISSIONER OF INCOME TAX Vs. HIMMAT LAL HINGER

JUDGEMENT

(1.) THE Tribunal has referred the following question of law arising out of its orders dt. 24th Nov., 1988, 7th Dec., 1988 and 3rd Aug., 1989 in respect of asst. yrs. 1983-84, 1985-86 and 1986-87 under s. 256(1) of the IT Act, 1961 :

(2.) THE matter with regard to the `cost', was considered by this Court with reference to the provisions of s. 43(1) in the case of CIT vs. Ambica Electrolytic Capacitors Pvt. Ltd. & Ors. (1991) 91 CTR (Raj) 49 : (1991) 191 ITR 494 (Raj). THE question that the subsidy or investment subsidy given by the Government which is for development of industries in selected backward districts/areas cannot be deducted from the actual cost for giving the benefit of depreciation or investment allowance. It was further observed that, as a matter of fact, the subsidy is a grant for encouraging entrepreneurs to come forward and develop the backward areas. As such, it cannot be deducted from the cost of the assets to the assessee for denying the benefit of depreciation or investment allowance.