Whether a grant which is not directly relatable to non-depreciable assets should be concluded as an income (in accordance with section 2(24)(xviii) and therefore be offered to tax or Whether such grant should be proportionately reduced from the cost of the asset in accordance with para 7 of the ICDS VII.

Manual - ICDS VII : Government Grants

As per the Preamble to this ICDS, in the event of contradiction between the Act and the ICDS, the provisions of the Act would prevail. Accordingly, grants which are not directly relatable to nondepreciable assets should be offered to tax as income and not recognised as a deduction from the cost of the asset. Consequently, operation of para 7 of the ICDS would be confined to depreciable assets only.

Dated: 31-8-2017