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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 ..... furnished during the course of assessment - - - - - Dated:- 13-7-2005 - Judge(s) : V. C. DAGA., A. S. AGUIAR. JUDGMENT The judgment of the court was delivered by V.C. Daga J.- By this reference under section 256(1) of the Income-tax Act, 1961, ("the Act"), the Income-tax Appellate Tribunal has referred for the opinion of this court questions of law arising from the order dated May 28, 1987, in I.T.A. No. 1769/Bom/84 for the assessment year 1980-81 reproduced hereinbelow: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount received under the Central Government's outright grant of Subsidy Scheme of 1971 for industrial units set up in selected backward districts or areas did not go to reduce the actual cost as defined in section 43(1) of the Income-tax Act, 1961, for the purpose of computing the depreciation for the assessment year 1980-81? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that deduction under sub-section (1) of section 35CC could not be denied to the assessee although the statement of expenditure which was required to be furnished und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme in question was similar to the Central Investment Subsidy Scheme. According to the Tribunal, the subsidy was given by way of incentive to establish industries in particular backward area. The whole purpose of the subsidy was to encourage industries as a whole and not to meet the cost of any particular asset by providing incentive to lure the entrepreneurs to move to particular areas. The subsidy, though measured as a percentage of the fixed investment which included investment made in land, buildings, plant and machinery, etc., yet nevertheless the subsidy amount could be utilized for any purpose including for the purpose of working capital or even for repaying the loans already borrowed. Thus, according to the Tribunal, there was no direct or indirect relationship to meet a portion of the actual cost and as such, the amount in question would not come within the ambit of the term "met" in section 43(1) of the Act and as such, the amount in question was not liable to be deducted from the written down value of land, buildings, plant and machinery for computing depreciation. The Tribunal relied on the decision of its Special Bench in the case of Pioneer Match Works [1982] 1 BO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in Form No. 3AA filed before the Inspecting Assistant Commissioner in the proceedings under section 144B, the learned Commissioner of Income-tax (Appeals) directed the Income-tax Officer to consider the assessee's claim on the merits. Against this direction, the Department came in appeal before the Tribunal. The Tribunal observed that it was not disputed that the statement of expenditure in Form No. 3AA issued by M/s. R.H. Desai Co., Chartered Accountant, had been filed by the assessee in the course of assessment proceedings, as such, the question was whether deduction under sub-section (3) would not be allowable to the assessee merely because the statement had not been filed physically with the return itself but had been filed subsequent to the filing of the return in the course of assessment proceedings. The Tribunal discussed the decisions of various High Courts on the interpretation of similar words appearing in section 184(7) of the Act, viz., "furnishes along with the return of income...." and held that the requirement of furnishing along with the return was directory and not mandatory and that filing of the statement of expenditure in the course of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directory. The Division Bench of this court in the case of Shivanand Electronics [1994] 209 ITR 63 reached to the conclusion extracted herein below: "The requirement of filing the audit report 'along with the return of income' is directory and if the assessee complies with the same before completion of the assessment and offers a satisfactory explanation for his failure to submit the same in time, the Income-tax Officer may consider the same and examine the claim of the assessee for deduction under section 80J on the basis of such report." A perusal of the aforesaid finding recorded by this court shows that the requirement of filing of the report along with the return of income is held to be directory. If the assessee acquires and files such report complying with the requirement of section 80J(6A) before completion of assessment, the Income-tax Officer is required to consider and examine the claim of the assessee for deduction under section 80J on the basis of such report. Having seen the finding recorded by this court while considering the provision 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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