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TMI Blog2013 (2) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment on the purchase of generator set – A.O. opined that assessee was required to reduce the cost of generator set by this amount and then claim the depreciation on the balance amount – Held that:- Following the decision in case of Ponni Sugars & Chemicals Ltd. (2008 (9) TMI 14 - SUPREME COURT) the subsidy in the case was granted by the State Government on the purchase of generator set. Hence, the same is capital subsidy and should go on to reduce the cost of asset – In favour of assessee The case law from the Apex court in the case of P.J. Chemicals (1994 (9) TMI 1 - SUPREME COURT) is also not applicable on the facts of the case. In the said case the subsidy was with reference to a percentage of capital cost, which is not the case her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, admittedly the tax is below Rs. 3 lakhs. Hence, the appeal is in contravention of the aforesaid CBDT Circular/Instruction. Hence, the same is liable to be dismissed. Accordingly, this appeal by the revenue stands dismissed for tax effect. 4. Assessee s Cross Objection The grounds raised in the assessee s cross objection read as under:- i) That the Ld. Commissioner of Income Tax (A) has grossly erred in sustaining part disallowance under the following heads: S.No. Nature of expenditure Amount disallowed Relief Disallowance confirmed 1. Telephone expenses 80,000/- out of 9,38,661/- 60,000/- 20,000/- 2. Travelling expenses 1,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer made the disallowance under several heads as under:- S.No. Nature of expenditure Amount disallowed Remarks of the Assessing Officer 1 Gifts and rewards 34,556/- Not incurred for business purpose 2 Telephone expenses 80,000/- out of 9,38,661/- Personal use of telephones 3 Travelling expenses 1,00,000/- out of 13,73,900/- Non-business purpose; vouchers do not contain specific details. 4 Vehicle maintenance 1,20,000/- out of 11,89,886/- Non business purpose; unverifiable nature of vouchers. 6. Before the Ld. Commissioner of Income Tax (A) assessee interalia submitted that for the precedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find that impugned disallowances were made by the Assessing Officer on the ground that personal use of the facility cannot be ruled out. No specific defect showing that concerned expenditure was incurred for personal use of the assessee has been pointed out by the Assessing Officer. Under the circumstances, in our considered opinion, the additions in this regard are only on estimate basis without any dollop of cogency. Under the circumstances, we set aside the orders of the authorities below and delete the additions in this regard. 9. Apropos issue of subsidy of Rs. 75,000/- On this issue Assessing Officer held that from the details furnished by the assessee, it has been found that the assessee has received a subsidy from the Harya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons for their deductibility from actual cost. Government subsidy, it is not unreasonable to say, is an incentive not for the specific purpose of meeting a portion of the cost of the assets, though quantified as or geared to a percentage of such cost. If that be so, it does not partake of the character of a payment intended either directly or indirectly to meet the actual cost. Therefore, subsidies granted to industries on a percentage of the capital cost are not deductible from the actual cost under section 43(1) for purpose of calculation of depreciation. C. In view of the order of the Supreme Court in P.J. Chemicals the subsidy received has not been reduced from the cost of the assets and as there is no other provision to tax the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereby directed to reduce Rs. 75000/- from the block assets (which included generator set) and allow depreciation as per the ratio laid down in the case of P.J. Chemicals Ltd. (Supra). 11. Against the above order the assessee has filed the cross objection before us. 12. We have heard the rival contentions in light of the material produced and precedent relied upon. Ld. Counsel of the assessee relied upon the Hon ble Apex Court judgement in the case of C.I.T. vs. Ponni Sugars Chemicals 219 CTR 205. 12.1 Ld. Departmental Representative on the other hand relied upon the decision of the Hon ble Apex Court in the case of Sahney Steel and Press Works Ltd vs. C.I.T. 228 ITR 0253. In this case, we find that following was held :- Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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