2011 (6) TMI 853

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..... 9 raising following question for our consideration. Whether in facts and circumstances of the case and in law Appellate Tribunal is right in holding that the subsidy received by the assessee cannot be reduced from written down value for purposes of computing depreciation on windmills? 2. Shortly stated facts are as follows: 2.1 The assessee is engaged in generation of power by installing windmills besides being involved in other manufacturing activities. During the assessment year in question i.e.A.Y. 2004-05, the assessee had installed windmills and received subsidy of ₹ 10,10,59,625/- from the State Government for the same. Subsidy was with respect to Sales Tax payable. The assessee's contention was that subsidy was n .....

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..... o supplement the ever increasing demand of electricity. We further find that the incentive is given not to meet the cost of acquisition of wind mill. As the incentive is for promoting alternative source of energy and not to meet the cost of acquisition, it cannot be reduced from the brought forward W.D.V. The contention of the appellant that the cost of acquisition has been determined in past year and the W.D.V. has to be worked out on the basis of such original cost reduced by depreciation actually allowed and therefore there is no scope for reducing W.D.V. by the amount of incentive. In view of the facts and more particularly the nature of incentive it is quite clear that the assessee's case is not hit by the insertion of explanation .....

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..... erent and politically neutral way to his result . In the present case, the reasoning underlying and implicit in, the conclusion reached by the majority of the High Courts cannot be said to be an unreasonable view and on a preponderance of preferability that view commends itself particularly in the context of a taxing statute. The expression actual cost needs to be interpreted liberally. The subsidy of the nature we are concerned with, does not partake of the incidents which attract the conditions for their deductibility from actual cost . The 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 s .....

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