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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 ..... he Appellant : Mrs Swati Soparkar, Advocate For the Respondent : Mr KM Parikh, Advocate JUDGMENT ( Per : Honourable Mr. Justice KS Jhaveri ) 1. By way of this Appeal, the original assessee has challenged the judgment and order of the Tribunal whereby the appeal preferred by the present appellant was dismissed, confirming the order of CIT (Appeals) whereby the subsidiary which was received by the appellant which was taken was reduced from capital investment. 2. This Court on 30.11.2005 had admitted the matter 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 sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of certain assets acquired by the assessee has been met by the subsidy resolved from government amounting to ₹ 8,73,702/-. The Assessing Officer has reduced the subsidy relatable to each asset from the cost of each asset. The action of the Assessing Officer is in conformity with the provision of Explanation 10. The only contention of the assessee is that during the year under consideration the subsidy was not received and, therefore, the Assessing Officer was not justified in making the adjustment in this year. We are unable to 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand reduced to the extent of subsidy received by the assessee for the purchase of such asset. However, in the present case, the assessee created total facility by constructing building and installing various machineries in 1993-94. Thus, the actual cost of the assets in respect of which subsidy has been granted, came to be determined at the relevant time. Thereafter, the assets entered the block of assets and lost their independent identity and the cost of such assets merged with the other assets in the block. At the time when the actual cost 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 act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of the block of assets by the amount of subsidy received in relation to some of the assets forming part of the block of assets. Consequently, the costs of assets cannot be reduced out of the written down value of their respective blocks to the extent of ₹ 25,00,000/- as the statute does not envisage any manner of doing so. When the Assessing Officer reduces the cost of assets out of the written down value of the block of assets, he is reducing not only the cost of assets in relation to which the subsidy is granted, but the cost of all assets 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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