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TMI Blog2016 (6) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... tter wherein the following questions were framed for consideration :- "[1] Whether, on the facts and circumstances of the case the Income Tax Appellate Tribunal was justified in law in holding that even in case of subsidy which was admittedly received in a year, earlier to the year under consideration, merely because the same is transferred to the capital account of the partners, the cost of assets could be reduced by the said amount while working out the depreciation allowance? [2] Whether, on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was right in law in holding that the cost of assets could be reduced by the amount of subsidy which was received prior to insertion of Explanation 10 to Section 43( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accept the above submission. Depreciation has to be allowed on the basis of WDV. WDV means actual determination of actual is necessary. Section 43(1) defines "actual subsidy from the actual cost of an asset. Thus, for working out of the depreciation, determination of actual cost was necessary. The Assessing Officer has rightly worked out the actual cost and then WDV of the assets. Therefore, we do not find any justification to interfere with the order of CIT(A) on this point who has upheld the working of the Assessing Officer. Accordingly, ground No.1 of the assessee's appeal is rejected. 5. We have heard learned Advocates for the respective parties and perused the records of the case. It is necessary to refer to Paragraphs 9 and 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assets came to be computed under section 43(1) of the Act, Explanation 10 was not on the statute book and therefore, the assessee was not required to reduce the amount of subsidy from the actual cost. Moreover, at that point of time, though the subsidy had been sanctioned, the same was not disbursed. The subsidy came to be actually given in the year under consideration; a long time after the actual cost of assets came to be determined under section 43(1) of the Act. The question that arises for consideration is as to whether Explanation 10 to section 43(1) of the Act can be given effect to in the facts and circumstances of this case, by reducing the actual cost of the assets by the amount of subsidy received by the assessee. To put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets forming part of the block, irrespective of whether any subsidy was granted in respect of such assets. Under the circumstances, when the statute does not contemplate computation of actual cost of asset after it becomes part of a block of assets, Explanation 10 to sub-section (1) of section 43 of the Act cannot be made applicable to assets of which the actual cost has been determined much before the insertion thereof and which also form part of a block of assets. Therefore, when it is not possible to apply Explanation 10 of section 43(1) of the Act, in relation to an asset which has entered into the block much before the insertion thereof, it must be regarded as never having been intended by the legislature to apply to assets forming par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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