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TMI Blog1983 (11) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... inclusive of borrowed capital and the deduction to be allowed should be Rs. 4,61,984. This claim has been rejected by the Commissioner (Appeals). The assessee is no further appeal before us. 3. We are unable to accept the assessee's submission that it is entitled to further deduction. The Madhya Pradesh High Court has upheld the validity of rule 19A of the Income-tax Rules, as it stood before its amendment in 1980 Finance Act. Please see the decision in the case of Commissioner v. Anand Behari Steel & Wire Products (1982) 133 ITR 365 (MP) section 80J has been amended retrospectively by the Finance Act, 1980, and the Madhya Pradesh High Court has held that consequent to the amendment, the borrowed capital could not be treated as capital em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o depreciation at all would have been admissible. However, the ITO has allowed depreciation on Rs. 1,78,471. This amount merely represents the instalments pald. Until the last instalments are paid, property would not vest on the assessee. Therefore, there was no logic in the department's holding that depreciation will be allowable on instalments pald. We will have to hold that the assessee is entitled to depreciation on the department's own showing. Once the question of eligibility is decided, then the only issue remains would be the actual cost of the property is Rs. 6,63,000. This would include an element of interest, but that is also part of the actual cost. This point has been decided by the Supreme Court in the case of Challapalli suga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the capital subsidy to any specific purpose. In other words, the assessee can utilise the capital subsidy for any revenue purposes. It can use it in payment of wages or meeting the interest dues on loans from the bank. It can also use it for any capital purchases, like purchase of machinery. This position is made clear by the Special Bench of the Tribunal in the case of Pioneer Match Works v. ITO (1983) 15 TTJ (Mad.) 88 : (1983) 3 ITD 714 (Mad.) (SB). 8. From the conduct of the assessee it would appear that it was treating the amount of capital subsidy as any other loans taken from the financiers. That is why it had requested for the adjustment of the capital subsidy against the advances taken from the financing corporation. The e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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