Punjab-Haryana High Court
Commissioner Of Income-Tax vs Industrial Cables (India) Ltd. on 8 January, 2002
Equivalent citations: [2002]257ITR417(P&H)
Author: N.K. Sud
Bench: N.K. Sud
JUDGMENT Jawahar Lal Gupta, J.
1. The assessee filed its annual income-tax return for the assessment year 1974-75. Vide order dated March 26, 1980, the assessing authority finalised the assessment under Section 143(3) of the Income-tax Act 1961, at a total income of Rs. 2,09,300. On discovering that the company had received subsidy from the Government at the rate of 15 per cent, of the fixed assets installed by it for a steel wire unit, proceedings under Section 154 of the Act were initiated and additional liability was created. The assessee filed an appeal. The Commissioner of Income-tax (Appeals) held that the amount of subsidy could not be deducted from the actual cost for the purpose of Section 43(1) of the Act. The order was affirmed by the Tribunal. On a petition under Section 256(1) of the Act, the High Court directed the Tribunal to make a reference to this court. Thus, the following question has been referred for the opinion of this court ;
"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the issue regarding deduction of the amount of subsidy received by the assessee on the basis of investment in fixed assets from the cost of such assets for working out their actual cost under Section 43(1) of the Income-tax Act, 1961, for the purpose of depreciation and development rebate, was a debatable issue and hence action under Section 154 to rectify the error in the computation of the actual cost could not be taken by the Inspecting Assistant Commissioner (Assessment) ?"
2. Mr. Sawhney concedes that in view of the judicial opinion expressed in various decisions, the question regarding the deduction of the amount of subsidy was a debatable issue. It was not an error apparent on the record. On the merits, the matter is concluded by the decision of the apex court in CIT v. P.J. Chemicals Ltd. [1994] 210 ITR 830, against the Revenue.
3. Admittedly, the subsidy was intended to serve as an incentive to the asses-see to move to backward areas and establish industries. It was not a payment to meet a part of the actual cost of the fixed assets. The amount of subsidy was not liable to be deducted from the actual cost under Section 43(1) for the purpose of calculation of depreciation, etc.
4. Resultantly, the question is answered against the Revenue and in favour of the assessee.
5. Since no one has appeared for the assessee, we make no order as to costs.