AGARWAL INDUSTRIES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal has referred the following two questions of law arising out of its order dated November 27, 1986, in respect of the assessment year 1982-83 under Section 256(1) of the Income-tax Act, 1961 ;

(2.) WHETHER the Tribunal was right in coming to the conclusion that deduction under Section 80J on the subsidy amount would not be available as the said amount was not assessee's own capital contribution ?"

(3.) EXPLANATION 1 to Section 80J provides that "actual cost" has the same meaning as in Clause (1) of Section 43 and the interpretation of "actual cost" under Section 43(1) has been given by the apex court as stated above. The observation of the Tribunal that the subsidy is a loan was considered by this court in the case of Agarwal Industries v. CIT, 1995 211 ITR 30 (D.B. I.T. Ref. No. 51 of 1988), decided on July 21, 1994 and it was held that it cannot be considered as a loan.