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TMI Blog2010 (10) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and against the Department. Depreciation - The Assessing Officer by his order dated February 18, 1986 had given depreciation of 15 per cent. after deducting subsidy amount from the cost of the generator - Enhanced to 20 per cent. by the Commissioner of Income-tax (Appeals) and confirmed by the Tribunal. The generator is not mentioned in Appendix 1 relating to table of rates and as such award of depreciation at 20 per cent. was incorrect and is on the higher side. - 13 of 1990 - - - Dated:- 21-10-2010 - YATINDRA SINGH, PRAKASH KRISHNA, JJ. JUDGMENT This is a reference at the instance of the Income-tax Department (the Department) under section 256(2) of the Income-tax Act, 1961 (the Act) for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax (Appeals) (the "CIT(A)") on December 2, 1986. He deleted the addition of the sales tax amount and allowed 20 percent. depreciation on the cost of the generator without reducing it by the subsidy received form the Government. 7. A part of the order of the Commissioner of Income-tax (Appeals) was against the assessee also. Subsequently the assessee as well as the Department filed appeals. The appeal filed by the Department regarding the question referred was dismissed. The appeal of the assessee was partly allowed. 8. The Department filed an application to refer four questions to the High Court for opinion. This application was partly allowed on September 10, 2010. The two questions as aforesaid have been referred to for op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate of 20 per cent. 14. The Supreme Court in CIT v. P. J. Chemicals Ltd. [1994] 210 ITR 830 held that the Government subsidy is an incentive that is not meant for any specific purpose though it might be quantified as a percentage of such cost: it does not partake of the character of a payment intended either directly or indirectly to meet the actual cost under section 43 of the Act. 15. The principle laid down in the aforesaid Supreme Court has been applied by our court in respect of generators in CIT v. Jayana Cold Storage and Ice Factory [2003] 260 ITR 430 (All), CIT v. Rakesh Cold Storage [2005] 274 ITR 102 (All) and Janta Sugar Industries v. CIT [2007] 295 ITR 448 (All) ; [2005] UPJC 676. In view of this, there was no i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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