2013 (1) TMI 39

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..... rnment of Karnataka for commissioning co-generation plant – Held that:- Yes, According to Explanation 10 and proviso to sub-section (1) of Section 43, the subsidy amount shall be deducted in the actual cost of the asset of the assessee. The contention of the assessee that the subsidy received towards the Generation Plant shall not be reduced from the actual cost of the assets is not correct. In favour of revenue
Dr. K. BHAKTHAVATSALA AND B. SREENIVASE GOWDA, JJ. Jeevan J. Neeralgi for the Appellant. Sangram S. Kulkarni for the Respondent. JUDGMENT Dr. K. Bhakthavatsala, J. - Those two Appeals filed by the Revenue are directed against the common order dated 2.12.2010 made in ITA Nos.130 and 131/Panaji/2009 on the file of Income Tax A .....

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..... n the earlier order passed by the ITAT, by order dated 31.8.2009, (vide Annexure-C), allowed the Appeal and/directed the Assessing Officer not to reduce the amount of subsidy from the cost of the assets for the purpose of calculation of depreciation. Feeling aggrieved by the order at Annexure-C, the Revenue, unsuccessfully preferred Appeals before the ITAT at Panaji in Nos.130 and 13]/Panaji/2009. The Tribunal dismissed both the Appeals on 2.12.2010, confirming the order of the CIT (Appeals). This is impugned in this Appeal. 4. Revenue has raised the following common substantial questions of law in the above-said Appeals: "(i) Whether the Tribunal was right in law in holding that the capital subsidy received from the Government for commis .....

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..... the accounting standards and the subsidy received by the assessee need not be reduced from the actual cost of the assets and there is no illegality or infirmity in the impugned order. 7. It is pertinent to mention that Explanation 10 to Section 43(1) of the Income Tax Act, 1961 was inserted and it came into force with effect from 1.4.1999. Since assessment orders are in relation to assessment years 2001-02 and 2006-09 subsequent to the insertion of the above Explanation, it is useful to excerpt Explanation 10 as well as Proviso to the above-said provision for immediate reference: Explanation 10 of Section 43(1): "Where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Governmen .....

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