Himachal Pradesh High Court
Commissioner Of Income-Tax vs Ruchira Papers Ltd. on 23 March, 1994
JUDGMENT V. Ratnam, C.J.
1. In this tax reference, under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the Revenue, the following question of law has been referred for the opinion of this court, in respect of the assessment year 1986-87 :
"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that cash subsidy received by the assessee is 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 allowance under Section 32 of the Act ?"
2. In Srinivas Industries v. CIT [1991] 188 ITR 22 (Mad), I had occasion to consider an identical question and, on a consideration of the provisions of the scheme and the relevant provisions of the Act, as well as the view taken by the different courts on this question, it was held that the actual cost of assets cannot be reduced by the amount of subsidy received and Section 43(1) of the Act would be inapplicable. It is not in dispute that this decision would govern this reference as well. We, therefore, answer this question, referred to us, in the affirmative and against the Revenue. There is no order as to costs.