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TMI Blog2006 (3) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... of calculation of depreciation? (ii) Whether, the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to treat the ore shed as plant and allow depreciation and extra shift allowance?" Before this court addresses itself to the legal position on the subject, a few facts may first be noticed. The assessee was manufacturing filter aids. In the course of assessment proceedings for the assessment year 1985-86 the assessee claimed depreciation of ore shed and road to factory at 10% on the ground that they were plant. The Assessing Officer rejected this claim of the assessee as they were not treated as plant for the assessment year 1983-84. Further the Assessing Officer while computing the income deducted the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Assessing Officer not to deduct the amount of subsidy from the cost of assets for the purpose of calculation of depreciation cannot be regarded as erroneous in view of the decision of the Supreme Court rendered in the case of CIT v. P.J. Chemicals Ltd. reported in [1994] 210 ITR 830. In the said decision, after a review of the law on the point, the Supreme Court has held as under: "Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure adopted under the scheme to quantify the financial aid, is not a payment, directly or indirectly, to me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(b) and 3.1(c) of the order of the Tribunal. The finding that the ore shed performs the function of the plant and is an integral part of it, is based on appreciation of the evidence adduced by the assessee and this finding is not demonstrated to be erroneous. On a careful scrutiny of the evidence it is clear that the ore shed is situated within the factory premises and this is a special type of structure wherein the machinery are built-in and the facilities are created so that the loose raw material is smoothly fed to treat the ore shed as plant. The evidence shows that the ore shed performs the functions of the plant and is an integral part of the plant and machinery. The finding that the ore shed is plant is recorded on the basis of evi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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