High Court Of Punjab & Haryana
CIT vs. Industrial Cables (India) Ltd.
Asst. Year 1974-75
Jawahar Lal Gupta & N.K. Sud, JJ.
IT Ref. No. 79 of 1987
8th January, 2002
R.P. Sawhney with M.S. Guglani & N.G. Sharma, for the Applicant : None, for the Respondent
Jawahar Lal Gupta, J. :
The assessee filed its annual income-tax return for the asst. yr. 1974-75. Vide order dt. 26th March, 1980, the assessing authority finalised the assessment under s. 143(3) of the IT Act, 1961, at a total income of Rs. 2,09,300. On discovering that the company had received subsidy from the Government at the rate of 15 per cent of the fixed assets installed by it for a steel wire unit proceedings under s. 154 of the Act were initiated and additional liability was created. The assessee filed an appeal. The CIT(A) held that the amount of subsidy could not be deducted from the actual cost for the purpose of s. 43(1) of the Act. The order was affirmed by the Tribunal. On a petition under s. 256(1) of the Act, the High Court directed the Tribunal to make a reference to this Court. Thus, the following question has been referred for the opinion of this Court : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the issue regarding deduction of the amount of subsidy received by the assessee on the basis of investment in fixed assets from the cost of such assets for working out their actual cost under s. 43(1) of the IT Act, 1961, for the purpose of depreciation and development rebate, was a debatable issue and hence action under s. 154 to rectify the error in computation of actual cost could not be taken by the IAC (Asst) ?”
Mr. Sawhney concedes that in view of the judicial opinion expressed in various decisions, the question regarding the deduction of the amount of subsidy was a debatable issue. It was not an error apparent on the record. On merits, the matter is concluded by the decision of the apex Court in CIT vs. P.J. Chemicals Ltd. (1994) 121 CTR (SC) 201 : (1994) 210 ITR 830 (SC) : TC 29R.367 against the Revenue. Admittedly, the subsidy was intended to serve as an incentive to the assessee to move to the backward areas and establish industries. It was not a payment to meet a part of the actual cost of the fixed assets. The amount of subsidy was not liable to be deducted from the actual cost under s. 43(1) for the purpose of calculation of depreciation, etc. Resultantly, the question is answered against the Revenue and in favour of the assessee.
Since no one has appeared for the assessee, we make no order as to costs.
[Citation : 257 ITR 417]