1983 (3) TMI 67

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..... tentions, they are disposed of by this consolidated order for the sake of convenience. 2. The assessee had installed a generator at its factory for which it had to incur an expenditure of Rs. 1,05,542. The ITO found that the assessee had received a subsidy of Rs. 37,905 from U.P. Financial Corporation towards the cost of the generator. He was of the view that for determining 'actual cost' for the .....

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..... ing at 'actual cost' of the asset. According to the assessee, its actual cost to the assessee in the year under appeal was Rs. 1,05,542, which alone could be taken into account for allowing depreciation and development rebate. The Commissioner (Appeals) agreed with this view and directed the ITO to determine the actual cost of the generator at Rs. 1,05,542. 4. The department is now in appeal befo .....

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..... e about this fact. It appears that the assessee had applied for subsidy on 30-5-1976. After meeting various formalities, it was actually granted to the assessee only on 26-5-1977. In fact, some other formalities had also been carried out, the last being on 26-5-1980. However, as stated by us above, it cannot be denied that subsidy related back to the date of the installation of generator. This vie .....

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..... al with the assessee's appeal. The ITO found that the assessee had created development rebate reserve only to the extent of Rs. 12,548 in the assessment year under appeal. He, therefore, allowed development rebate only to the extent of Rs. 16,731, 75 per cent of this amount was Rs. 12,548. He rejected the assessee's claim that development rebate of Rs. 6,195 created by it in accounting year 1969 r .....

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..... e. It was observed at page 923 of the report, that the full reserve may not be created in a single year, depending on the available income it may take more than one year to create the reserve to the full extent of the development rebate, which is allowable. Respectfully following these observations of the Court, which are binding on us, we direct the ITO to allow the development rebate not only wi .....

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