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TMI Blog2001 (10) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion of this court: R.A. Nos. 19 and 20/JP of 1989: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Central Government subsidy is not deductible from the money cost to the assessee of its plant, machinery and building while computing the original cost thereof under section 43(1) of the Income-tax Act, 1961, for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax, reversed the finding and held that the amount of subsidy granted to the assessee is not deductible from the money cost for the purposes of allowing depreciation, investment allowance, etc. The order of the Commissioner was confirmed in second appeal by the Tribunal. The relevant facts with respect to the second question are that while computing the taxable income of the assessee-fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee by a Division Bench of this court in CIT v. Ambica Electrolytic Capacitors Pvt. Ltd. [1991] 191 ITR 494. The court held that the subsidy or investment subsidy given by the Government for the development of industries in backward areas cannot be deducted from the actual cost for the purposes of depreciation or investment allowance. The court held that it is an ex-gratia allowance to industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er considering the views of the various High Courts held that a Government subsidy is not given as an incentive for the specific purpose of meeting the portion of the cost of the assets. It does not partake of the character of a payment either directly or indirectly to meet the actual cost. The court further held that the amount of subsidy is not to be deducted from the actual cost under section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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