2011 (11) TMI 869 - AT - Income Tax

Summary

Issues Involved: Appeal against the order of ld. CIT(A)-II, Agra for the Assessment Year 2007-08 regarding the addition of capital subsidy u/s 43(1) of the I.T. Act.

Capital Subsidy Addition Issue:
The Revenue appealed against the deletion of the addition of Rs.7,50,000/- made by the Assessing Officer on account of capital subsidy received by the assessee. The A.O. contended that the capital subsidy should be deducted from the cost of fixed assets, affecting the depreciation calculation. However, the ld. CIT(A) relied on the decision of the Hon'ble Supreme Court in CIT vs. P.J. Chemicals (1994) 210 ITR 830 to argue that section 43(1) does not apply in this case. The Tribunal agreed with the ld. CIT(A) that the capital subsidy need not be reduced, as per the Supreme Court judgment, and upheld the deletion of the addition.

General Grounds Issue:
The Tribunal did not adjudicate on the general nature of ground nos. 2 & 3 raised by the Revenue, as they did not require specific consideration.

In conclusion, the appeal of the Revenue in ITA No.236/Agr/2010 was dismissed by the Appellate Tribunal ITAT Agra, upholding the decision of the ld. CIT(A) to delete the addition of capital subsidy based on the interpretation of section 43(1) of the I.T. Act.