1994 (3) TMI 172 - AT - Income Tax

Summary

Issues:
1. Central subsidy received by the assessee for the purpose of grant of depreciation.
2. Allowability of weighted deduction under s. 35B for expenditure incurred after 1st March, 1983.
3. Allowance of investment allowance and depreciation on interest payment capitalized.
4. Deletion of additions made towards provision for leave salary.

Central Subsidy and Depreciation:
The appeal concerns whether central subsidy received by the assessee should be reduced from the cost of plant and machinery for depreciation grant. The Tribunal upheld the assessee's position based on a Bombay High Court judgment, directing the Assessing Officer to allow depreciation without reducing the subsidy from asset cost. The appeal by the Revenue failed on this ground.

Weighted Deduction under s. 35B:
The challenge was raised regarding the weighted deduction under s. 35B for expenditure incurred after 1st March, 1983. The Tribunal found that this plea was not raised before the CIT(A) and deemed the ground misconceived, leading to its rejection.

Investment Allowance and Depreciation on Interest Payment Capitalized:
The issue revolved around the allowance of investment allowance and depreciation on interest payment capitalized. The CIT(A) allowed the claim following a Tribunal decision, but the Tribunal disagreed, citing a Bombay High Court ruling that interest payable after the asset's first use is not included in actual cost. Consequently, the Department's appeal on this ground succeeded.

Provision for Leave Salary:
The dispute involved the deletion of additions made towards provision for leave salary. The Tribunal considered the liability for leave encasement as contingent and not an ascertained one, disallowing the provision for such liability as a deduction. Rulings by various High Courts were cited to support this decision, resulting in the Department's appeal being partially allowed.

In conclusion, the Tribunal's judgment addressed various issues related to depreciation, deductions, and provisions, relying on relevant legal precedents to decide in favor of the assessee on some grounds while allowing the Department's appeal in part on others.