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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether subsidy received by the assessee was required to be deducted from the cost of the assets for the purpose of allowing depreciation. (ii) Whether investment allowance, being a special deduction, was deductible from commercial profits while computing relief under Section 80HH.
Issue (i): Whether subsidy received by the assessee was required to be deducted from the cost of the assets for the purpose of allowing depreciation.
Analysis: The issue was covered by prior judicial authority holding that subsidy does not go to reduce the actual cost of assets for depreciation purposes.
Conclusion: The issue is answered in favour of the assessee and against the Revenue.
Issue (ii): Whether investment allowance, being a special deduction, was deductible from commercial profits while computing relief under Section 80HH.
Analysis: Relief under Section 80HH had to be computed on the income determined in accordance with the Act, and not on gross commercial profits; Section 80AB was applied for this computation.
Conclusion: The issue is answered in favour of the Revenue and against the assessee.
Final Conclusion: The reference was answered on two distinct questions, granting relief to the assessee on depreciation computation and to the Revenue on the computation of deduction under Section 80HH.
Ratio Decidendi: Subsidy does not reduce the actual cost of depreciable assets, while deduction under Section 80HH must be computed on income determined in accordance with the Act after the relevant statutory deductions.
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