2002 (1) TMI 20 - HC - Income Tax

Depreciation Developement Rebate Actual Cost Subsidy From Government - 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)? - the question is answered against the Revenue and in favour of the assessee.

Summary

The High Court of Punjab and Haryana ruled that the subsidy received by the assessee for establishing an industry should not be deducted from the actual cost of fixed assets for depreciation calculation. The court held that the subsidy was an incentive and not a payment towards the assets' cost. The decision favored the assessee, citing precedents.