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TMI Blog2005 (7) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (1) of section 35CC could not be denied to the assessee although the statement of expenditure which was required to be furnished under sub-section (3) of section 35CC had been furnished in the course of assessment proceedings and not with the return itself?" Question No. 1: The factual matrix with respect to this question reveals that the assessment year with which we are concerned is 1980-81, of which the accounting year ended on December 31, 1979. In the relevant accounting year the assessee received a sum of Rs. 4,42,654 as a cash subsidy on its "New Vapi Project" from the Government of Gujarat. This amount was directly taken to the balance-sheet and credited to the capital reserve and shown as a liability under that head. The Income-tax Officer found that the assessee had received this sum under the Gujarat State Government Scheme for 15 per cent, outright grant of subsidy for industrial units in selected backward areas and growth centres. The subsidy amount had been calculated on the basis of investments made on the fixed assets by the company up to June 30, 1978. The investment of the assessee-company came to Rs. 23,87,000 on buildings and Rs. 35,54,000 on pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd machinery for computing depreciation. The Tribunal relied on the decision of its Special Bench in the case of Pioneer Match Works [1982] 1 BOT 331. This question relating to the grant of cash subsidy under the Central Government's outright grant of Subsidy Scheme of 1971 for industrial units set up in selected backward districts or areas was a subject-matter of consideration before the apex court in the case of CIT v. P.J. Chemicals Ltd. [1994] 210 ITR 830, wherein the apex court was pleased to hold that the subsidy in question did not reduce the actual cost as defined in section 43(1) of the Income-tax Act, 1961, for the purpose of computing the depreciation, as such the amount of subsidy is not to be deducted from the "actual cost" under section 43(1) for the purpose of calculation of depreciation. Since the question is covered by the aforesaid judgment of the apex court in the case of P.J. Chemicals Ltd. [1994] 210 ITR 830, in that view of the matter, following the said judgment we answer the question in the affirmative, i.e., in favour of the assessee and against the Revenue. Question No. 2: As far as the factual aspect of the second question is concerned, it seems that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnishing along with the return was directory and not mandatory and that filing of the statement of expenditure in the course of assessment was sufficient compliance with the provisions of sub-section (3) of section 35CC of the Act. The Tribunal held that all that the Legislature intended was that the return should be duly filed and that the statement of expenditure should also be duly filed and that both these documents should be before the assessing authority at the time when the said authority is applying his mind to the assessment of that particular assessee. Consequently, according to the Tribunal, the condition in sub-section (3) of section 35CC for allowing deduction under sub-section (1) of section 35CC had been fulfilled. The Tribunal, accordingly, confirmed the direction of the Commissioner of Income-tax (Appeals). The answer to the said second question, thus, centres around interpretation of sub-section (3) of section 35CC of the Income-tax Act, 1961, wherein sub-clause (3) thereof provides that no deduction shall be allowed in respect of expenses referred to in sub-section (1) unless the assessee furnishes, along with the return of income for the assessment year, for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of section 80J(6A) of the Act, it is now necessary to compare subsection (3) of section 35CC with that of section 80J(6A) of the Act to examine and consider the applicability of the said judgment for deciding the present case. Section 80J(6A) and section 35CC(3) read as under: ------------------------------------------------------------ Sub-section (6A) Section 35CC(3) of section 80J ------------------------------------------------------------ "Where the assessee is "No deduction shall be allowed a person other than a in respect of the expenditure company or a co-operative referred to in sub-section (1) society, the deduction unless the assessee furnishes, under sub-section (1) along with the return of income from profits and gains for the assessment year for derived from an which the deduction is claimed, industrial undertaking &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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