2001 (9) TMI 12 - HC - Income Tax

1. Whether the Appellate Tribunal is right in law and on facts in holding that the subsidy amount should not be deducted from the cost of plant and machinery for allowing depreciation investment allowance and for computation of capital employed under section 80J of the Income-tax Act 1961? - 2. Whether the Appellate Tribunal is right in law and on facts in holding that for working out relief under section 80HH of the Act initial depreciation has not to be deducted from the profits of the company? - our answer to question No. 1 is in the affirmative i.e. in favour of the assessee and against the Revenue. - our answer to question No. 2 is in the affirmative i.e. in favour of the Revenue and against the assessee.

Summary

The High Court of Gujarat ruled on two questions regarding tax assessments for the year 1983-84.

1. Subsidy should not be deducted from the cost of plant and machinery for tax purposes, based on a previous apex court decision.
2. Initial depreciation must be deducted before working out relief under section 80HH of the Income-tax Act, 1961.

The court's decision favored the assessee in the first question and the Revenue in the second question.