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TMI Blog1991 (11) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... the plant and machinery to determine the actual cost for the purpose of granting depreciation ? " The factual antecedents are as follows : M/s. Kalinga jute Products (P) Ltd (hereinafter referred to as "the assessee") received a sum of Rs. 2,88,634 as a subsidy from the Government of Orissa under the Central Outright Grant of Subsidy Scheme, 1971. The Assessing Officer held that this amount was deductible from the cost of the plant and machinery for the purpose of calculation of depreciation. Reference was made to section 43, clause (1), of the Act for finding out the meaning of the expression "actual cost". He observed that a part of the cost of the assets was met directly by the Government in question, and, therefore, for calculating w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Revenue challenged his conclusion before the Tribunal and the appeal was numbered as ITA No. 184 (CTK) of 1984. The Tribunal, after referring to a Special Bench judgment of the Tribunal in Pioneer Match Works v. ITO [1983] 3 ITD 714, concurred with the conclusion of the Commissioner of Income-tax (Appeals). It held that the principles have been rightly applied and, therefore, there was no scope for any interference with the appeal filed by the Revenue. Mr. A. K. Ray, learned standing counsel, emphasises the language of clause (1) of section 43 which reads as follows : "In sections 28 to 41 and in this section, unless the context otherwise requires (1) 'actual cost' means the actual cost of the assets to the assessee, reduced by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial growth in the State, and the subsidy is granted as an incentive, it cannot be inferred, unless materials indicate to the contrary, that the subsidy is granted to the entrepreneurs to meet part of the actual cost. The mere fact that a certain percentage of the fixed capital cost is adopted as a measure for quantification of the subsidy is of no consequence. The object of the grantor has to be gathered. On facts, the Commissioner of Income-tax (Appeals) and the Tribunal have come to hold that the subsidy was not intended to be a reimbursement but, on the contrary, its grant was circumscribed by certain other conditions relating to the grantee's entitlement. It is not shown to us that the conclusion of the Tribunal is factually untenable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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